Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Portsmouth Corporation Bill,

As amended, considered; to be read the Third time.

Ministry of Health Provisional Orders (Accrington and Leicester) Bill,

Read a Second time, and committed.

WALLASEY CORPORATION (TROLLEY VEHICLES) PROVISIONAL ORDER BILL,

"to confirm a Provisional Order made by the Minister of Transport under the Wallasey Corporation Act, 1927, relating to the Wallasey Corporation Trolley Vehicles," presented by Mr. Parkinson; read the First time; and referred to the Examiners of Petitions for Private Bills, and to be printed. [Bill 134.]

Oral Answers to Questions — CHINA.

JAMIESON COLLIERIES, HONAN.

Mr. ARTHUR MICHAEL SAMUEL: 1.
asked the Secretary of State for Foreign Affairs what steps His Majesty's Minister in China has taken to safeguard the interests of the British mining company which owns the Jamieson collieries in Honan province; and whether he has protested to the Chinese Government against the proposed transfer of the British company's rights to the Chinese Chung Yuan Company?

The SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Arthur Henderson): I have received no report on this matter, but I have asked His Majesty's Minister in China to let me know what the position is.

Mr. SAMUEL: Will the right hon. Gentleman be able to give me an answer
if I put down a question in a week or two?

Mr. HENDERSON: I do not know whether we can get the information by then. If the hon. Member puts down a question and I have the information, I will certainly answer him.

NANKING (BRITISH SUBJECTS).

Sir KINGSLEY WOOD: 3.
asked the Secretary of State for Foreign Affairs what measures are being taken to protect British subjects in Nanking; how many British subjects have been captured and how many have been murdered during the last 12 months; whether adequate protection to British subjects is now being afforded by the Nanking Government; and what is the present general condition of the country so far as law and order are concerned?

Mr. A. HENDERSON: The situation at Nanking is not such as to call for any special measures for the protection of British subjects. No British subjects have been murdered or captured at Nanking during the last 12 months. The National Government recognise their responsibility for ensuring the adequate protection of British subjects, and I am confident that they are anxious to discharge it to the best of their power. The right hon. Gentleman may perhaps realise, however, that there are parts of China, more especially in the interior, which are at present only nominally under the control of Nanking. It is, I regret to say, quite probable that attacks on British subjects may from time to time occur in these districts.

Sir K. WOOD: Has the right hon. Gentleman in his reply had regard to the murder of the lady missionaries and others who, I understand, are under the protection of this Government?

Mr. HENDERSON: I have had that all in my mind, and I think I have answered the points put in the question.

Sir K. WOOD: But does the right hon. Gentleman suggest that adequate protection has been afforded in these unfortunate instances?

Mr. HENDERSON: I did not say that.

Oral Answers to Questions — NAVAL ARMAMENTS.

Sir K. WOOD: 2.
asked the Secretary of State for Foreign Affairs if he can now make a further statement as to the present position of the negotiations between France, Italy, and this country concerning the naval agreement?

Rear-Admiral BEAMISH: 6.
asked the Secretary of State for Foreign Affairs the position of the negotiations between the French, Italian, and British Governments in regard to naval armaments?

Captain PETER MACDONALD: 8.
asked the Secretary of State for Foreign Affairs whether there has been any intervention on behalf of the United States of America in the Anglo-French-Italian naval discussions; and what form that intervention has taken?

Mr. A. HENDERSON: Since the answer which I gave on the 20th of April to the right hon. Gentleman, the Member for West Woolwich (Sir K. Wood), and the hon. and gallant Member for South Paddington (Vice-Admiral Taylor), further proposals have been submitted by the French Government, to which a reply has been returned by His Majesty's Government. This reply has also been communicated to the Italian Government. His Majesty's Government is now awaiting further replies from both Governments. While the United States Government have not participated in the recent negotiations, they have been kept fully informed of all developments.

Mr. HANNON: May I ask that, in the meantime, no change shall take place in the policy of His Majesty's Government with reference to the maintenance of the British Navy at full strength?

Mr. HENDERSON: I do not know what change could take place in the meantime.

Captain MACDONALD: Will the right hon. Gentleman say whether the United States intend to send representatives to this conference?

Mr. HENDERSON: There is no conference.

Captain MACDONALD: The proposed conference.

Mr. HENDERSON: There is no proposed conference.

Rear-Admiral BEAMISH: Does not the right hon. Gentleman think that in common fairness we ought to have the support of the United States and Japan in this matter?

Mr. HENDERSON: Certainly, and that is why we keep them informed, and they keep us informed of their views.

Rear-Admiral BEAMISH: I do not think the right hon. Gentleman heard my question correctly. Are we not justified in expecting their active support?

Mr. HENDERSON: I do not know what the hon. and gallant Member means by "their active support."

Oral Answers to Questions — SUEZ CANAL.

Mr. QUIBELL: 4.
asked the Secretary of State for Foreign Affairs the number of meetings held during 1930 by the Board of the Suez Canal Company; and where such meetings were held?

Mr. A. HENDERSON: Twelve meetings of the Board were held during 1930. All these took place in Paris.

Oral Answers to Questions — ITALY (BRITISH OFFICIAL'S ARREST).

Mr. BOOTHBY: 7.
asked the Secretary of State for Foreign Affairs whether his attention has been called to the arrest at Taormina, on 12th March last, and subsequent imprisonment without trial, of Mr. Hugh Cholmondeley, M.C., late honorary attaché in His Majesty's Diplomatic Service; and whether he is taking any steps to secure his liberty?

Mr. A. HENDERSON: Yes, Sir. The attention of the Italian Government was drawn urgently to this case by His Majesty's Ambassador in Rome on the 16th of March, and again on the 21st of March, and representations were also made to the local Italian authorities by His Majesty's Consul. I am glad to say that Mr. Cholmondeley was released on bail on the 26th of March. Every effort is being made to expedite the hearing of this case in the Italian courts.

Mr. BOOTHBY: Will the right hon. Gentleman make some inquiries into the circumstances under which Mr. Cholmondeley was arrested, in order to satisfy himself as to whether it may or may
not be necessary to make representations to the Italian Government on a matter of principle?

Mr. HENDERSON: The information at my disposal does not lead me to think I can make any representations, and, of course, as the case is sub judice the less I interfere the better.

Oral Answers to Questions — RUSSIA.

DEBTS, CLAIMS, AND COUNTER-CLAIMS.

Sir WILLIAM DAVISON: 9.
asked the Secretary of State for Foreign Affairs whether he is aware that of the three sub-committees of the Anglo-Soviet Conference constituted in September, 1930, who are dealing with the private claims of British citizens against the Soviet Government in respect of property appropriated by them without compensation, Sub-committee A (dealing with properties) has so far had no meeting, Sub-committee B (dealing with bonds) has only met on two or three occasions, while Sub-committee C (dealing with miscellaneous claims) has only met once; and whether, having regard to the fact that the claims which have been submitted on behalf of British citizens to the Conference amount to approximately£250,000,000, he will take all possible steps to ensure the prompt settlement of these claims by the Conference, and further inform the Soviet representatives that, pending a settlement of these longstanding British claims, no further credits can be provided by this country for Russia?

Mr. A. HENDERSON: The task of the Joint Committee is not to settle claims but to report the results of its investigations to the plenipotentiaries. I am disappointed at the slow progress of these negotiations, but I do not consider that the refusal of export credits in respect of goods exported from this country to the Soviet Union would be an appropriate remedy.

Sir W. DAVISON: Does not the right hon. Gentleman think that if Great Britain has any money to devote to credits it would more appropriately be devoted to giving credits to people who have had their property appropriated rather than to those who appropriated it?

Mr. HENDERSON: All that may be true, but how the withholding of credits is going to benefit the bondholders, whom I am anxious to assist, I do not know.

Sir K. WOOD: What steps does the right hon. Gentleman propose to take in the circumstances?

Mr. HENDERSON: To bring to bear all the pressure I can to keep the committees at work and to try to secure results.

Mr. MARJORIBANKS: Will the right hon. Gentleman consider the question of following the example of Italy, which has arranged a very satisfactory scheme with the Soviet Government in regard to credits, and so on?

Mr. HAYCOCK: Did the late Government make any attempt at all to bear in mind—

Mr. SPEAKER: Mr. Mander.

PROPAGANDA (INDIA).

Commander BELLAIRS: 12.
asked the Secretary of State for Foreign Affairs, in view of the terms of the agreement with the Soviet Government, what action he proposes to take in regard to the resolution of the Executive Committee of the Communist International, urging that Communists must take over the leadership of the Indian masses, exploit the Indian National Congress, and organise general strikes, and drawing attention to the headway made by the Communist movement, accompanied by conflicts with the authorities?

Mr. A. HENDERSON: The text of the resolution of the Executive Committee of the Communist International, as reported in "Pravda" of the 24th of April, deals mainly with measures for the defence of the Soviet Union, and contains no reference to India. India is, however, mentioned in what are described as the "theses" which precede the resolution. These contain an appreciation of the Indian situation as seen by the Communist International. I do not consider that these utterances merit undue attention.

Commander BELLAIRS: But surely the right hon. Gentleman will admit that
it is a breach of the Treaty he made with the Soviet Government, and may I ask him at what stage his patience will become exhausted?

Mr. HENDERSON: In reply to the first part of the question, I do not admit that it is a breach, or else my patience might have become exhausted.

Mr. MARJORIBANKS: Will the right hon. Gentleman ask the Secretary of State for India whether—

Mr. SPEAKER: Mr. Hore-Belisha.

Oral Answers to Questions — POLAND.

Mr. MANDER: 10.
asked the Secretary of State for Foreign Affairs whether Poland has now put into effect the Law of 26th September, 1922, granting autonomy to Lemberg, Stanislau, and Tarnopol, and approving the establishment of a Ukrainian university, in virtue of which sovereign rights were granted to Poland over Eastern Galicia by the Council of Ambassadors on 14th March, 1923?

Mr. A. HENDERSON: This law has not yet been put into force. The hon. Member must not, however, assume that I necessarily admit the accuracy of the statement contained in the last part of his question.

Mr. MANDER: In view of the fact that this is an international obligation of the Polish Government, will not the right hon. Gentleman take steps to urge that it should be carried into effect?

Oral Answers to Questions — GREECE AND BULGARIA (ARBITRATION).

Mr. MANDER: 11.
asked the Secretary of State for Foreign Affairs what replies have been received from the Greek and Bulgarian Governments with reference to his proposals for the settlement by arbitration of all outstanding matters in dispute?

Mr. A. HENDERSON: As I am still in communication with the two Governments I should prefer not to make any statement at this stage.

Oral Answers to Questions — ROYAL NAVY.

KING ALFONSO'S SON (TRAINING).

Mr. AYLES: 17.
asked the First Lord of the Admiralty whether the total cost to the State of training the son of King Alfonso at Dartmouth Naval College will be borne by the parent; and, if not, what proportion will be borne by the parent and what proportion will be borne by the State?

The FIRST LORD of the ADMIRALTY (Mr. A. V. Alexander): The answer to the first part of the question is in the affirmative, and the second part does not therefore arise.

ADMIRALTY CONTRACTS (POTATOES).

Mr. LOUIS SMITH: 22.
asked the First Lord of the Admiralty in respect of how many contracts for potatoes made by the Admiralty during the past six months have the supplies contained a proportion of foreign potatoes; and what steps have been taken with a view to ensuring that contracts shall not be made for potatoes in future unless a satisfactory undertaking is given that only home-grown potatoes will be supplied unless there are insufficient quantities available in the country?

Mr. ALEXANDER: It is not possible to reply definitely to the first part of the inquiry. Running contracts exist at over 30 ports and in view of the present high prices and relative shortage of homegrown potatoes it is probable that supplies under any of these contracts—like supplies to the civil population—have included some imported potatoes. As regards the second part of the question no undertaking of the indefinite nature indicated is obtained, but contractors are expected to supply home-grown when supplies of good quality are reasonably obtainable, and there is no doubt that in normal seasons the great bulk of the supply is home-grown.

Mr. SMITH: Did the right hon. Gentleman consult his colleague the Minister of Agriculture with regard to the supply of potatoes, as I think we can assume that there are plentiful supplies at the present time?

Mr. ALEXANDER: I think consideration of the position in the last few weeks would show that if there had been an adequate supply of home-grown
potatoes of the right quality there would not have been the run there has been on imported potatoes.

MEAL ORDERS.

Sir BERTRAM FALLE: 23.
asked the First Lord of the Admiralty how naval ratings who are travelling on duty in a restaurant train obtain their meals when in possession of Admiralty meal orders?

Mr. ALEXANDER: Usually meal orders are exchanged for meals at the station of departure, or at a convenient junction en route.

GENERAL MESSING SCHEME.

Sir B. FALLE: 24.
asked the First Lord of the Admiralty whether men who are messed under the general messing system are required by the paymaster-commander in charge of general messing to pay mess bills, observing that the Navy Estimates state that the men are provided with complete messing under the general messing scheme?

Mr. ALEXANDER: A full dietary is provided under the system of general messing, the basis being to provide what is most popular with the greatest number, and the arrangements are always open to suggestions from the ship's company as a whole. There should consequently be no necessity to incur mess bills, but if men choose to take up extras outside the menu they must expect to pay for them.

WAR VESSELS (SPEED TESTS).

Sir CHARLES CAYZER: 25.
asked the First Lord of the Admiralty whether his attention has been called to the large orders which have been secured in recent years by foreign shipyards from foreign Governments for torpedo-boat destroyers and similar classes of light war vessels; and whether, in view of the fact that these orders are obtained largely through the high speeds notified as having been obtained by the light war vessels of certain foreign powers at their trials, he will give instructions that will permit of a full-power test of suitable vessels of the Royal Navy taking place under service conditions with a view to demonstrating that the performance of British-built war vessels is in no way inferior to that of any other Power?

Mr. ALEXANDER: My information does not go to show that speed is the determining factor in the award of contracts for foreign warship building, nor do I believe that the ability of British designers to produce speeds as high as may be desired is in any doubt, either here or abroad. As regards the last part of the question, all new vessels before acceptance into the Royal Navy carry out a complete series of trials at different speeds, including trials at full power, to show their capacity to fulfil the conditions of their design.

Mr. ROSS: Is the right hon. Gentleman aware that the Italian yards got by far the largest proportion of orders for foreign war vessels and have published some very high speeds recently; and does he not think that that may have some bearing on the situation?

Lieut. - Commander KENWORTHY: Has the First Lord any information showing that foreign Governments are subsidising their shipbuilding yards for the construction of warships?

Sir C. CAYZER: Is it not a fact that the ships of the Royal Navy are running trials without the full speed tests and only up to the designed horse-power, and will not the right hon. Gentleman arrange for full-power tests?

Mr. ALEXANDER: I wish to make the position quite clear. There is no question at all that we are not conducting proper periodical full-speed tests in Royal Navy ships. That is done regularly, and there ought to be no misapprehension about that. As regards the question put by the hon. Member for Londonderry (Mr. Ross), I dare say that high speeds may be got in certain trials, but such trials have always to be judged by the conditions under which they are run, whether under light draught or other conditions. There is no doubt at all in the minds of the people of other countries as so our capacity for coming up to speed. In regard to the question put to me by the hon. and gallant Member for Central Full (Lieut.-Commander Kenworthy) I have no further information beyond that which I gave to the House on a former occasion.

Rear-Admiral BEAMISH (for Sir NICHOLAS GRATTAN-DOYLE): 21.
asked the First Lord of the Admiralty whether
he is aware of the effect of limited fuel consumption in diminishing the value of Fleet manœuvres; and whether he will arrange for the resumption of full-speed tests of British naval vessels?

Mr. ALEXANDER: As regards the first part of the question, every effort is made to prevent the economies which in these times it is essential to practise being detrimental to the effieciency of the Fleet. The latter part of the question is not understood.

MARRIAGE ALLOWANCES.

Sir B. FALLE: 26.
asked the Parliamentary Secretary to the Admiralty if he can state the cost of granting marriage allowance to ratings who may marry at 24, 23 and 22 years of age?

Mr. ALEXANDER: As the reply contains a table of figures, I will, with the hon. Member's permission, circulate it in the OFFICIAL REPORT.

Following is the reply:

In the absence of statistics of the number of ratings of 22 to 24 years of age who are married and of the size of their families, no reliable figures can be given, but on the basis of such information as is available it is estimated that the annual cost would be approximately as follows:


If age at which Marriage Allowance is payable were reduced to
Marriage Allowance for wife only.
Marriage Allowance for wife and one child.



£
£


24 years
…
…
5,800
9,900


23 years
…
…
12,000
20,500


22 years
…
…
18,700
31,900

AUSTRALIAN NAVY (OFFICERS' PAY).

Captain BOURNE (for Mr. SMITHERS): 15.
asked the First Lord of the Admiralty whether he is aware that Royal Naval officers serving in the Royal Australian Navy have had their pay appreciably reduced by a so-called special Income Tax; and whether, in view of the terms of the contract under which these officers volunteered for service in the Royal Australian Navy, any steps are being taken to compensate these officers for the loss sustained by them?

Mr. ALEXANDER: The answer to the first part of the question is in the affirmative. The Admiralty are in communication with the Australian authorities on the subject. I regret that the Admiralty cannot accept the responsibility of compensation.

Captain BOURNE: When will the right hon. Gentleman be in a position to make a statement as the result of his communication?

Mr. ALEXANDER: It is difficult to say. I think the best way would be to put down a question in, perhaps, a fortnight's time, but I cannot promise now that an answer will then be available.

Oral Answers to Questions — PALESTINE (TREATMENT OF PRISONERS).

Mr. FREEMAN: 28.
asked the Under-Secretary of State for the Colonies whether he will consider the desirability of amending the prison rules and regulations in Palestine so that there shall be no specially favourable treatment of political prisoners who have been accustomed to a higher standard of living, but all political prisoners be allowed the same privileges and amenities?

The UNDER-SECRETARY of STATE for the COLONIES (Dr. Drummond Shiels): As I have explained to the House on previous occasions, the law of Palestine, like the law of England, makes no discrimination between political and other prisoners. The Secretary of State—as at present advised—is not prepared to interfere with the regulations governing the treatment of prisoners in Palestine.

Oral Answers to Questions — AIRSHIP POLICY.

Captain P. MACDONALD: 30.
asked the Under-Secretary of State for Air whether he can now make a statement as to the policy of the Government in regard to airship construction?

Mr. DAY: 29.
asked the Under-Secretary of State for Air whether the Government have now decided upon its future policy with reference to airship construction and the ultimate disposal of the R100?

The UNDER-SECRETARY of STATE for AIR (Mr. Montague): I would refer the hon. Members to the answers given
by the Prime Minister yesterday on this subject, and to my reply to the hon. Member for Colchester (Mr. O. Lewis) which was circulated in the OFFICIAL REPORT.

Captain MACDONALD: That does not answer my question at all. My question is: when are the Government coming to a decision on this matter? I have already postponed my question for two weeks in order to give the Government an opportunity of making up their minds. In view of the very high cost of maintenance, it is very important that we should have this information.

Mr. MONTAGUE: That question was dealt with in an answer which I circulated in the OFFICIAL REPORT yesterday, and it was to the effect that the report is now being considered by the Economy Committee.

Captain MACDONALD: My question has nothing to do with the report on the R101.

Oral Answers to Questions — SCHOOL TREATS (TRANSPORT FACILITIES).

Mr. FREEMAN: 35.
asked the Minister of Transport whether he is aware that, to enable wagons and lorries to convey children for Sunday school treats and similar functions, a special road-service licence, involving an expenditure of £5 or £6 per lorry, must be first obtained; that in many cases suitable train services do not exist to reach the fields where such functions are normally held, and no ordinary licensed vehicle is available except at heavy expenditure on Saturdays and Bank Holidays for such purposes: and whether he will consider granting special facilities to meet this difficulty?

The MINISTER of TRANSPORT (Mr. Herbert Morrison): The matter is governed by Section 61 (3) of the Road Traffic Act, 1930, and the question involved is not the payment of a fee for a licence as a public service vehicle, but the fact that vehicles of the lorry type cannot conform with the conditions prescribed for vehicles used for the conveyance of passengers. The use of an ordinary lorry, especially is fitted with loose chairs or forms, for carrying a considerable number of passengers, is dangerous and undesirable on other grounds, and the provisions of the Sec-
tion referred to are aimed at preventing the use of such a vehicle for the conveyance of eight or more passengers, except in the special case where the vehicle is being used to convey workpeople in the course of, or to or from, their employment. I may add that these provisions are based on the recommendations of a Departmental Committee which examined very carefully the whole question of the use of public service vehicles, they were included in the Draft Road Traffic Bill which was circulated for discussion in 1927, and were submitted to the Royal Commission on Transport and accepted by them.

Mr. FREEMAN: Will the right hon. Gentleman consider the advisability of making some amendment of these Orders in view of the hardship to the children and people who like to take advantage of these lorries and wagons?

Mr. MORRISON: That course of action cannot be taken because the provision is statutory, and this is the form in which it passed the House of Commons. I have no power to modify the law.

Miss PICTON-TURBERVILL: Does the right hon. Gentleman not realise that this is a hardship on the children throughout the whole country, and cannot he find some way out of the difficulty?

Mr. MORRISON: I appreciate the position of hon. Members. I have recollections of my own Sunday school treats, but really one must take into consideration not only the pleasure of the children but the safety of the children travelling in such vehicles. There is really an element of danger to a large number of children who travel in these lorries, possibly sitting on loose seals or loose forms. I have the greatest sympathy with the Sunday school aspect of the matter, but I must also take into account, not only the pleasure of the children, but their safety.

Mr. FREEMAN: Has the Minister of Transport had experience of any serious accidents arising in these cases?

Mr. MORRISON: There have been accidents to vehicles of this kind, but I must remind hon. Members that the House of Commons has passed this law. This matter was, in fact, raised in Committee upstairs, and it is no good
blaming me. Parliament must take the responsibility for what has been done. I take responsibility for the advice which I gave to Parliament.

Mr. FREEMAN: Will the right hon. Gentleman consider amending legislation?

Sir NAIRNE STEWART SANDEMAN: Can the right hon. Gentleman not do something in this matter, because it means that a whole lot of cricket matches where people cannot afford to travel from one place to another eight or nine miles away are going to be stopped.

Mr. MORRISON: From the cricket match point of view, I do not think the hardship is so great. If it is a question of a vehicle carrying less than eight persons, the prohibition does not apply—[Interruption.] I assume that three out of the 11 would get there by some other means, but I appreciate the Sunday school point of view.

Vice-Admiral TAYLOR: Will the right hon. Gentleman consider some amendment to enable these teams to go to cricket and football matches and so on?

Oral Answers to Questions — TRANSPORT.

DORNIE FERRY (BRIDGE SCHEME).

Mr. MACPHERSON: 36.
asked the Minister of Transport when it is proposed to begin the construction of the bridge over Dornie ferry; and what has been the cause of the delay in beginning operations?

Mr. HERBERT MORRISON: I am unable to state when the Ross and Cromarty County Council are likely to commence the construction of the proposed bridged over Dornie Ferry. I understand that the county council are endeavouring to obtain a firm estimate of the full cost of the scheme, including compensation, and that until this estimate has been obtained, no decision to proceed with the scheme will be taken by them. I am writing to the right hon. Member more fully in the matter.

MOTOR COACH SERVICES.

Rear-Admiral SUETER: 41.
asked the Minister of Transport whether he will arrange to bring forward into the lists
of notices and proceedings of the traffic commissioners all applications from operators for road service licences in respect of services that have been commenced since his warning in July last; and that the hearings for these be expedited?

Mr. HERBERT MORRISON: The fixing of the dates on which applications for road service licences are to be heard is a matter for the traffic commissioners concerned, and I see no reason for interfering with their discretion.

Lieut.-Colonel Sir FREDERICK HALL: 42.
asked the Minister of Transport how many applications have been made for licences for the running of motor coaches for hire under the new Roads Act; how many of such applications have been already decided upon by the traffic commissioners; whether he can give any estimate of the legal and other expenses which will be incurred in dealing with the whole of the applications; and if he has under consideration the question whether it would be practicable to adopt more expeditious and less expensive machinery for dealing with the matter?

Mr. MORRISON: I am not informed as to the number of applications for road service licences for motor coach services which have been received or decided by the various area commissioners, and to obtain the information would impose additional work upon their staffs at a time of severe pressure. I cannot form any estimate of the legal and other expenses to be incurred by applicants and objectors. It is a matter for the parties themselves whether they wish to be legally represented or should appeal in person or through their own officers, as they are, of course, free to do. With a view to a saving in time and expense arrangements have been made by the commissioners to sit in various parts of their area for the convenience of the parties, and I am unable to suggest any more expeditious or less expensive machinery for dealing with these applications than that at present in operation. I have every hope that, as soon as the commissioners' decisions are given upon a number of applications involving questions of principle, it will be possible for them to deal with the remaining applications more rapidly.

Sir F. HALL: Does the right hon. Gentleman think that it would cost an enormous amount of labour to supply the House with the number of applications that have been made and the number already decided by the traffic commissioners? Surely that would not involve an enormous amount of work?

Mr. MORRISON: I am sure the House will appreciate that the traffic commissioners at present are working under terrific pressure. It is really a very difficult question, and I am anxious not to divert them from their labours. I do not think that the value of this information, when the House had it, would be in sufficient relation to the amount of disturbance that it would cause.

Sir F. HALL: Does not the right hon. Gentleman recognise that the reason for asking these questions is that, in the case of some of these applications which have been made, facilities have been granted after the event for which they were required has taken place, so that they were useless?

Mr. MORRISON: I am afraid I do not understand that question.

Sir F. HALL: Then I will put it in another way, if I may.

Mr. SPEAKER: Colonel England.

ROAD SCHEME, BURY.

Colonel ENGLAND: 43.
asked the Minister of Transport whether he will reconsider the financial offer made to the Bury Town Council in connection with the construction of the westerly by-pass road, with the object of increasing the amount and thus enabling the council to start the work?

Mr. HERBERT MORRISON: I have offered to consider this scheme on the basis of a grant of 60 per cent. I am unable to increase this measure of assistance.

MOTORING ACCIDENTS.

Mr. CHARLES WILLIAMS: 55.
asked the Secretary of State for the Home Department if he can give figures to show the number of motor-car accidents in England and the London area, respectively, during the first three months of this year and for the same period in 1930?

The UNDER-SECRETARY of STATE for the HOME DEPARTMENT (Mr. Short): My right hon. Friend regrets it is not possible to give comparable figures for the whole of the country. In London, including the Metropolitan Police District and the City, the accidents resulting in personal injury for the first three months in 1930 and 1931 were as follows: Fatal accidents, 320 in 1930 and 288 this year; non-fatal accidents, 10,535 in 1930 and 9,194 this year.

Oral Answers to Questions — ROYAL PARKS (CRICKET).

Mr. R. S. YOUNG: 44.
asked the First Commissioner of Works if the cricket pitches in the Royal Parks are regularly rolled; and, if so, how often?

The FIRST COMMISSIONER of WORKS (Mr. Lansbury): The practice of my Department is to roll the cricket pitches in the Royal Parks once a week.

Mr. YOUNG: Is the right hon. Gentleman aware that in past seasons most of these pitches have been very rough and dangerous: and would he consider supplying a roller in each of these parks, in order to allow these keen young cricketers to roll their own pitches?

Mr. LANSBURY: No; I think we must leave it as it is. There might be unevenness in the rolling.

Mr. YOUNG: 45.
asked the First Commissioner of Works whether he will inquire into the degree of efficiency of the refreshment service in the Royal Parks, particularly to avoid the long delays imposed upon cricket teams, many of which desire refreshment at the same period of the afternoons on which they play?

Mr. LANSBURY: The refreshment service in the Royal Parks has engaged my close attention, and I am arranging for various important improvements. As regards the cricket teams, I hope that under the arrangements now in force they will have no cause to complain of delay in being served.

Oral Answers to Questions — INDIA.

ROYAL DUTCH AIR LINES.

Lieut.-Commander KENWORTHY: 46.
asked the Secretary of State for India what information he has about the
operations of the Royal Dutch air lines from Amsterdam to Batavia by way of Calcutta and Rangoon; and what steps have been taken to meet difficulties that have been experienced with the landing grounds and ground organisations in India and Burma?

The SECRETARY of STATE for INDIA (Mr. Wedgwood Benn): With unimportant interruptions, a regular fortnightly service from Amsterdam to Batavia has been operated since September, 1930, and I understand that this service will be run as a weekly one from 1st October next. Progress is being made with the ground organisation in India and Burma as funds permit, and a chain of landing grounds along the trans-India route from Karachi to Victoria Point is now in regular use.

Captain CAZALET: Is it contemplated that this service should be extended to Australia?

Mr. BENN: That, of course, is not a matter which concerns my Department.

AIR FORCE.

Lieut.-Commander KENWORTHY: 47.
asked the Secretary of State for India how many Indian gentlemen are at present under training for the Air Force?

Mr. BENN: Six are now under training for the future Indian Air Force.

MR. GANDHI.

Commander OLIVER LOCKER-LAMPSON: 48.
asked the Secretary of State for India whether it is proposed to issue an invitation to Mr. Gandhi to visit this country for the purpose of taking part in the next Round Table Conference?

Mr. BENN: I would draw the hon. and gallant Member's attention to the speech of the Prime Minister at the concluding session of the Round Table Conference, and also to the statement issued on 5th March, in which he will find expressed clearly the desire of His Majesty's Government that Congress should be represented at the renewed discussions.

Commander LOCKER - LAMPSON: Does not the right hon. Gentleman think
it advisable that Mr. Gandhi, in present circumstances, should not visit this country?

Mr. SPEAKER: That appears to be a mere matter of opinion.

Oral Answers to Questions — WORKMEN'S COMPENSATION (POST OFFICE DEPOSITS).

Mr. THORNE: 49.
asked the Postmaster-General whether interest is paid on money deposited in the Post Office on behalf of a minor who has been awarded compensation by the court in respect to injuries sustained and covered by the Workmen's Compensation Act?

The ASSISTANT POSTMASTER-GENERAL (Mr. Viant): Interest is paid at the prescribed rate on all moneys deposited in the Post Office Savings Bank. Interest would therefore be paid on money deposited on behalf of a minor who had been awarded compensation by the court.

Oral Answers to Questions — TRADE AND COMMERCE.

RUSSIAN IMPORTS (LABOUR COSTS).

Sir F. HALL: 50.
asked the Secretary to the Overseas Trade Department whether he will obtain and furnish to the House information as to the labour costs incurred by the Soviet Government in proportion to the payments received by them in connection with timber, wheat, and other commodities imported into Great Britain from Russia during the 12 months ended 31st March, 1931?

Mr. GILLETT (Secretary, Overseas Trade Department): In view of the complex economic conditions of the Soviet Union, I regret that it would not be possible to furnish the information desired by the hon. and gallant Member.

Sir F. HALL: Considering the quantities of goods which are imported into this country, and which many of us think are produced under conditions that should not be recognised, does not the hon. Gentleman think that the information would be of the greatest possible use, not only to this House, but to the Government and the country as a whole?

Mr. GILLETT: I think it would be of no value whatever.

Sir F. HALL: rose—

Mr. SPEAKER: There is evidently a difference of opinion.

UNFAIR PRACTICES (SUPPRESSION).

Mr. MANDER: 53.
asked the President of the Board of Trade if, in view of the recommendation of the World Economic Conference in Geneva, May, 1929, in regard to the suppression of unfair commercial practices and of the endorsement of the recommendation by the Council of the League of Nations, the Government will urge the League of Nations to take action leading to the conclusion of a convention on bribery whereby this practice may be made specifically criminal in all the signatory States, and legal redress, civil and criminal, shall be assured by the contracting countries which accede to the convention?

Mr. GILLETT: I assume that the hon. Member has in mind a resolution of the World Economic Conference of 1927, recommending that the economic committee should continue its work in connection with the suppression of unfair commercial practices. That resolution was not concerned specifically with bribery, but subsequently the International Chamber of Commerce, at its Congress in 1929, adopted a resolution in the terms used in the question. This resolution was officially communicated to the League of Nations and referred for examination to the Economic Committee, who have, I understand, made inquiries through certain of their members on this subject with a view to its consideration when opportunity offers.

Mr. MANDER: Is not the hon. Gentleman aware how widespread this abominable system is; and will he take steps to press upon the League of Nations the necessity for taking some action?

Mr. GILLETT: There is a British member on this committee, and his attention has already been drawn to the hon. Member's question.

INTERNATIONAL FINANCIAL CORPORATION.

Sir F. HALL: 56.
asked the Chancellor of the Exchequer to what extent the British Government are concerned in any way with the proposal for the establishment of an international bank to finance
trade with new markets; will he say what is the present position of the scheme; whether it involves any financial guarantees on the part of the Government; and what is the limit of those guarantees?

The FINANCIAL SECRETARY to the TREASURY (Mr. Pethick-Lawrence): In answer to the first and second parts of the question, I would refer the hon. and gallant Member to the answers given to the hon. and gallant Member for the Central Division of Hull (Lieut.-Commander Kenworthy) on the 16th and 21st April. The answer to the third part of the question is in the negative, and, accordingly, the fourth part of the question does not arise.

Oral Answers to Questions — CUNARD STEAMSHIP COMPANY (NEW CONSTRUCTION).

Mr. THORNE: 51.
asked the President of the Board of Trade the reasons why work upon the orders for two Cunard liners receiving Government assistance has not been commenced?

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Mr. W. R. Smith): Under the Cunard (Insurance) Agreement Act, the Government undertook to provide insurance at reasonable rates for two large passenger steamers so far as this could not be covered by the insurance market. One of them has been under construction for some months, but no decision has yet been arrived at by the Cunard Company as to the commencement of the second vessel, and that matter is entirely one for the company to decide.

Mr. THORNE: Will my hon. Friend make representations to the President of the Board of Trade as to whether he cannot deal with this matter, since it would mean taking a very large number of men from the Employment Exchange?

Mr. SMITH: I can assure my hon. Friend that my right hon. Friend is very much aware of that fact, and that, so far as opportunity offers, he will take those steps; but I must repeat that the matter is one that is entirely within the jurisdiction of the Cunard Company.

Sir F. HALL: Is it not a fact that in the shipbuilding industry, according to the figures of the Employment Exchange, there are 62 per cent. of men
unemployed; and cannot something be done by the Government to accelerate this work?

Mr. SMITH: What it is possible to do will be done, but certainly we have not much power.

Oral Answers to Questions — COAL INDUSTRY (OIL EXTRACTION).

Captain CROOKSHANK: 52.
asked the President of the Board of Trade if he now has any further statement to make regarding the production of oil from British coal with a view to reducing unemployment in this country?

The SECRETARY for MINES (Mr. Shinwell): I would refer the hon. and gallant Member to the reply which I gave on the 27th April to a similar question by my hon. Friend the Member for Spennymoor (Mr. Batey).

Rear-Admiral BEAMISH: Will the hon. Gentleman convey to the Prime Minister and the Chancellor of the Exchequer the necessity for exempting the product of British coal from the taxation on petrol?

Lieut.-Commander KENWORTHY: It is exempted.

Oral Answers to Questions — SATELLITE TOWNS (COMMITTEE).

Captain CROOKSHANK: 54.
asked the Minister of Health if he now has any further statement to make regarding the provision of satellite towns with a view to reducing unemployment in this country?

Mr. PALING (Lord of the Treasury): I have been asked to reply. The Government propose to appoint at an early date a Departmental Committee to consider the provision of satellite towns.

Oral Answers to Questions — UNEMPLOYMENT (EXCHANGE FACILITIES, HIGHLEY, SHROPSHIRE).

Lieut.-Colonel WINDSOR-CLIVE: 57.
asked the Minister of Labour whether she will consider opening an Employment Exchange on one day a week at the mining village of Highley, in Shropshire, owing to the large number of persons
who have to undergo expense in proceeding thence to other places to draw benefit?

The PARLIAMENTARY SECRETARY to the MINISTRY of LABOUR (Mr. Lawson): I am having inquiry made, and will communicate with the hon. and gallant Member.

Lieut.-Colonel WINDSOR - CLIVE: Will the hon. Gentleman bear in mind the fact that over 100 persons are involved in this colliery village?

Mr. LAWSON: We are expediting the inquiry as much as we can.

Oral Answers to Questions — FORCED LABOUR (DRAFT CONVENTION).

Sir K. WOOD: 58.
asked the Minister of Labour if the Government have now decided to ratify the draft Convention on Forced Labour; and whether any further countries have signified their intention to ratify with or without reservations?

Mr. LAWSON: The Government propose to ratify the Draft Convention concerning Forced or Compulsory Labour. A White Paper (Cmd. 3841) was laid on 16th April setting out the Government's proposal. With regard to ratification by other countries, I have no information to add to the answer given to the right hon. Gentleman the Member for St. Marylebone (Sir R. Rodd) on 30th March last.

Sir K. WOOD: Have no other countries ratified since that date?

Mr. LAWSON: I could not say if any more have since ratified, beyond the number given in the answer to the question.

Mr. MARJORIBANKS: Is the hon. Gentleman aware that the majority of his party voted in favour of forced and slave labour the other day?

Mr. THORNE: Is not all labour forced under economic conditions?

Oral Answers to Questions — WEST INDIES (SUGAR INDUSTRY).

Mr. C. WILLIAMS: 27.
asked the Under-Secretary of State for the Colonies whether he has any information showing the present state of the West Indian sugar industry?

Mr. PALING: As the reply is long, I propose, with the hon. Member's consent, to circulate it in the OFFICIAL REPORT.

Following is the reply:

The following is a brief summary of the latest position as regards the West Indian sugar industry.

British Guiana.—Unemployment continues to increase but otherwise there has been little change since November, 1930. No estates have as yet gone out of cultivation. Most estates are reported to have had a satisfactory year so far as yields are concerned.

Barbados.—Unemployment is considerable and the position has been adversely affected by a severe drought, which has caused the failure of food crops in some districts.

Trinidad.—There has been little change since the report of November, 1930, published in Cmd. 3745, but some cane farmers are reported to have gone out of cultivation. On the largest estate the general position is said to be normal but on some other estates employment has been further restricted.

Antigua.—Owing to the drought, the production in 1931 will be the smallest for 50 years. Owing to severe unemployment relief work has had to be provided on a considerable scale.

St. Kitts.—The prolonged drought in 1930 has severely affected the crop. The yield is estimated at from 12,000 to 13,500 tons as compared with last season's yield of 18,700 tons. Ordinary employment is scarce and much public assistance is necessary.

St. Lucia.—At the present time crops are being taken and employment is consequently maintained. Both labour and wages have, however, been considerably reduced, and there is anxiety regarding the situation which may arise when the present crop has been taken off.

Oral Answers to Questions — NOTTING HILL ELECTRICITY COMPANY.

Mr. WEST: 32.
asked the Minister of Transport what was the average revenue received per unit of electricity sold for lighting and domestic purposes by the Bethnal Green and Poplar borough
councils and by the Notting Hill Electricity Company during 1929?

Mr. HERBERT MORRISON: The average revenue received per unit of electricity sold for lighting and domestic purposes was as follows:

d.


Bethnal Green Borough Council (1929–30)
2.60


Poplar Borough Council (1929–30)
2.44


Notting Hill Company (1929)
4.10

Mr. WEST: Am I to understand from this that the Poplar Borough Council are selling electricity for lighting purposes at 40 per cent. below the price charged by the Notting Hill Electricity Company?

Mr. MORRISON: That, would appear to be the case.

Sir K. WOOD: As these figures are in relation to the Poplar Borough Council, had they not better first be carefully examined?

Mr. WEST: 33.
asked the Minister of Transport what was the total amount paid in wages and salaries during 1930 by the Notting Hill Electricity Company; and what was the total amount made in profits by the company in 1930?

Mr. MORRISON: The wages and salaries charged to Revenue Account in 1930 amounted to £13,854, while those charged to Capital Account amounted to £16,864, making in total £30,718. The amount of profit in 1930, after allowing for interest on loan liabilities and for statutory payments to Sinking Funds, was £39,456.

Mr. WEST: Am I to understand that those figures are correct, and, if they are, does the amount paid by this company in profits exceed by 25 per cent. the total amount paid in wages and salaries?

Mr. SPEAKER: The hon. Member can work the sum out for himself.

Mr. WEST: 34.
asked the Minister of Transport what was the percentage return of dividend on the 27,050 deferred shares of the Notting Hill Electricity Company for 1930?

Mr. MORRISON: The dividend in 1930 on the deferred shares—which amount to a sum of £1,352 10s., only out of a total share capital of £201,352 10s.—
was about 17s. 4½d. per share or 1736 per cent., the average return on the share capital as a whole being 17.6 per cent.

Mr. WEST: In view of the fact that this company is paying, on a certain class of its shares, 1700 per cent, in dividends, is there not a case for taking action to reduce the very high price charged?

Mr. MORRISON: There is no action that I can take unless the local authority or consumers make application for a revision of charges, but my powers are very limited.

Mr. MARLEY: Will the right hon. Gentleman make inquiries whether current is being supplied over the grid by any power-producing company at a less cost?

Mr. MORRISON: I do not quite follow.

Mr. A. M. SAMUEL: What is the total rate of interest over the total amount of capital invested in the company?

Mr. MORRISON: I gave that—17.6 per cent.

BILLS REPORTED.

MARRIAGE (PROHIBITED DEGREES OF RELATIONSHIP) BILL.

Reported, with an Amendment, from Standing Committee A.

Report to lie upon the Table, and to be printed.

Minutes of Proceedings to be printed.

Bill, as amended (in the Standing Committee), to be considered upon Friday, and to be printed. [Bill 135.]

NORTHAMPTON EXTENSION BILL [Lords].

LONDON COUNTY COUNCIL (GENERAL POWERS) BILL.

LONDON MIDLAND AND SCOTTISH RAILWAY BILL.

MIDDLESEX COUNTY COUNCIL BILL [Lords].

Reported, with Amendments; Reports to lie upon the Table, and to be printed.

MESSAGE FROM THE LORDS.

That they have agreed to —

Birmingham Canal Bill, without Amendment.

Amendments to —

London Assurance Bill [Lords], without Amendment.

That they have passed a Bill, intituled, "An Act to confer further powers upon the rural district council of Rotherham for the regulation and control of the development of building estates and the laying out of new streets and in regard to buildings, sewers, and drains; and for other purposes." [Rotherham Rural District Council Bill [Lords].]

ROTHERHAM RURAL DISTRICT COUNCIL BILL [Lords].

Read the First time; and referred to the Examiners of Petitions for Private Bills.

Orders of the Day — WAYS AND MEANS.

Considered in Committee. [Progress, 28th April.]

[Sir ROBERT YOUNG in the Chair.]

AMENDMENT OF LAW.

Question again proposed,
That it is expedient to amend the Law relating to the National Debt, Customs, and Inland Revenue (including Excise), and to make further provision in connection with Finance."—[Mr. P. Snowden.]

Sir HERBERT SAMUEL: The chief point that springs to one's mind as one surveys the Budget proposals this year is the enormous strength which they indicate in the financial position of this nation taken as a whole. Here we are in a time of extreme trade depression—as grave a trade depression as the modern history of the country records—with a substantial proportion of the whole of our working-classes unemployed, and yet we are able, in the first place, unlike many of our neighbours, to meet all our liabilities. We pay 20s. in the £, and our shilling is worth a shilling and not only 2d., as in the case of many of our Continental neighbours through the depreciation of their currencies. Even if all the borrowing for the Unemployment Fund—this is taking the most extreme case—were to be regarded as a permanent charge upon the State, and even if it were regarded as fresh borrowing within the year, and irrecoverable in the future, still out of the resources of the nation we have been able not only to pay for all our annual expenditure, but to put by a certain margin, though not a very large one, for the repayment of Debt. That is a most remarkable feature in these difficult times, and I should like to ask hon. Members above the Gangway whether there is any Protectionist country which can point to results such as this, whether there is any Protectionist country with which they would desire to exchange our system of finance.
Heavy taxation there is undoubtedly, increased enormously since the War, but the income of the nation has increased much faster still. There has been
circulated to Members of the House, and to the public at large, a memorandum on our economic situation by a body of leading Protectionist manufacturers who have taken to themselves the grandiloquent title of the National Council of Industry and Commerce. Their chairman is Sir William Morris. This paper is an able statement, of the present facts. I have not examined in detail the figures that they give, but, for the purposes of this argument, I will accept them as they are stated. It is a presentation of the facts with regard to income and taxation designed to emphasise the heaviness of the burden that rests upon the people and to justify a strong plea for economy and for reduction of taxation. Therefore, these figures are not likely to err on the side of minimising our liabilities or exaggerating our resources. These figures show that, up to the latest year that has been given, our taxation, national and local taken together, has increased since before the War by no less than £816,000,000, a colossal sum. But in the same period the national income, according to this authority, has increased by £2,100,000,000, so that after deducting the whole of our increased Imperial taxation and the whole of the increase in local taxation, there is left in the body of the nation a net increase of income of no less than £1,300,000,000. Of course, the unfortunate fact of the situation is that it is not always the people who get the increase who have to pay the taxation. It may be Peter who pays, and Paul whose income has been enlarged.
There is a further fact to be borne in mind in this connection which has not, I think, so far been mentioned in these Debates either by the Chancellor of the Exchequer or by any other speaker. I hope that my right hon. Friend the Member for Epping (Mr. Churchill) will be taking part in these discussions—in a position of greater freedom and less responsibility, and he will, no doubt, pay tribute to the manner in which the Chancellor of the Exchequer has met the deficit for de-rating which he bequeathed to him. The right hon. Gentleman took the credit for relief of rates to the extent of some £26,000,000 a year and left to his successor the debit of finding about one-half of the expenditure that was involved, and of the deficit of this year, £12,000,000, is a direct inheritance from the right hon.
Gentleman. This is the point I wish to make. When it is pointed out how large an increase there has been in the burdens made by the Chancellor of the Exchequer upon the nation, it should be borne in mind that all this is not net increase in the burden of the taxpayer, including in the term of "taxpayer" the ratepayer; £26,000,000 of it is transferred.

The CHANCELLOR of the EXCHEQUER (Mr. Philip Snowden): £35,000,000.

Sir H. SAMUEL: It was originally £26,000,000. It has increased to £35,000,000 so the Chancellor of the Exchequer tells me, and this ostensible increase in the taxes imposed by the Chancellor of the Exchequer upon the nation is counter-balanced by a reduction in the amount of rates that are paid by certain classes of ratepayers. It is true that the relief has been, in our view, most unfairly distributed, and that an immense part of it goes to industries that are highly prosperous and which were in no need of relief. As the rain falls on the just and unjust alike, so the rating relief of the right hon. Gentleman has been given to the prosperous as well as to the needy. But the fact remains that this large sum of £35,000,000, which is always included among the items of increased taxation, is neutralised by the fact that there is an equivalent relief to local rating.
There was one omission, and a somewhat notable and regrettable omission, from the speech of the Chancellor of the Exchequer. I agree with the right hon. Gentleman the Member for Edgbaston (Mr. Chamberlain) in what he said yesterday that it might have been expected that the Chancellor of the Exchequer would speak to the House on the subject of the borrowing for the Unemployment Fund. There you have a fund for which about £35,000,000 had to be provided last year from the Exchequer, and which has been swallowed up in the enormous expenditure upon unemployment benefit. The finances of the State and the finances of the Unemployment Fund are now very much intermingled, and it would, I think, have been useful if the right hon. Gentleman had told us what his view was with regard to this sum of £35,000,000 for which he has had to borrow during the course of the year. He has on previous occasions said with
emphasis that he does not regard this as money lost to the State which is not to be recouped in the future.

Mr. SNOWDEN indicated assent.

Sir H. SAMUEL: The right hon. Gentleman indicates his assent to these observations. I think the Committee would have been glad to learn precisely what his view was on the subject and to have been informed if it is the Treasury view that this is not to be regarded as a permanent increase to the deadweight of national Debt, but, by some means and at some time, is to be recovered from the revenues of the Unemployment Fund.
This Budget will be welcomed on these benches for one reason among others. It has, I hope, given the coup de grace to the suggestion that we can only meet our financial needs by the device of a tariff for revenue. There are a good many persons who have said that an increase in direct taxation is not possible, that it would be too great a burden upon industry, and that the only other resort to which any Chancellor of the Exchequer could turn would be a tariff upon imported articles of one class or of many classes. This Budget gives the refutation to that plea. There is still in reserve very large resources to which the Chancellor of the Exchequer may turn without departing from past precedents of our finances and to which, if the extreme case of necessity arose, he might have recourse without adding to the heavy burdens of high direct taxation or establishing a so-called tariff for revenue. Of course, we all know that this phrase of "a tariff for revenue" is wholly insincere. It may be that the ostensible purpose of the tariff might be revenue, but we all know, from the past records and the present principles of those who advocate it—or almost all of them—that Protection is its aim, and further that Protection would be its certain result.
Only to-day I read in the Press that a committee of the Birmingham Chamber of Commerce—the Imperial and Local Finance Committee—presented to the council of the chamber a report yesterday in which they regretted that the Chancellor of the Exchequer has not taken the opportunity of introducing a revenue tariff, and in the innocence of their hearts they describe the purpose of a revenue tariff as being this:
Has not taken the opportunity of introducing a revenue tariff with a view to reducing the import of manufactured articles which can be made in this country and provide additional employment.
That purpose may be right or it may be wrong, but it is obviously a gross insincerity to try and secure its acceptance on the ground that it is a revenue tariff. A revenue tariff means a tariff which will not necessarily have any protectionist effect, but which is a fiscal device in order to bring in revenue alone, such as a Tariff upon goods not produced in this country—coffee or tea—or a tariff which is accompanied by a countervailing excise. Those are tariffs for revenue. A tariff which is introduced with a view to reducing the import of manufactured articles is purely a protectionist tariff and nothing else.
When hon. Members, such as my hon. and gallant Friend the Member for Bournemouth (Sir H. Croft), pray in aid the names of Mr. Keynes and Sir Josiah Stamp, I would like to ask them whether they are prepared to accept the reasons given and the limitations suggested by those gentlemen on the tariff which they have advocated. Both Mr. Keynes and Sir Josiah Stamp have said that the purpose of that tariff is to raise prices. Will hon. and right hon. Members above the Gangway go to the country and say that the purpose of the tariff which they propose is to raise prices? If so, it will be a most important element in our fiscal controversy, and, at last, we shall be able to have a controversy on the basis of candour and sincerity, because hitherto they have been denying that Protection will raise prices. Of course, they are concerned to point out that they will not raise the cost of living and that they do not desire to raise the cost of production.
Secondly, both Mr. Keynes and Sir Josiah Stamp have advocated a tariff which shall be purely temporary and which they regard as an evil: a temporary emergency tariff to meet the mere circumstances of the moment. Are hon. and right hon. Members above the Gangway, and is my right hon. Friend the Member for Edgbaston, prepared to say that the tariff that he proposes is to be only temporary, and that as soon as prices have risen to the level of 1929, if they do so rise, the tariff is to be auto-
matically repealed? That is Mr. Keynes' proposal, and, unless hon. Members above the Gangway are prepared to accept it in those terms and on those conditions, they have no right to suggest that those authorities are allied to them or support the policy which they propose.
The reasons that were given by the Chancellor of the Exchequer against the so-called tariff for revenue were unanswerable, and it is unnecessary for me to add a single word, because they could not have been more concisely and more effectively expressed. The complete condemnation which he gave of that proposal and the approval with which his observations were met by hon. Members opposite showed quite clearly that the Labour party, at all events, will not introduce this so-called tariff for revenue. Certainly, the Liberal party so far from supporting it would fight it, from whatever source it originated, with the utmost energy and with all the resources at their command. The Conservative party have repudiated it as a whole. Here is a quotation from the late chairman of the Conservative party, my right hon. Friend the Member for Edgbaston, who, speaking when he was chairman, on the 20th February, used significant words at Birmingham. I would invite the special attention of the Committee to the quotation because it is clear and specific, it comes with very great authority from the right hon. Gentleman who was lately chairman of the Conservative party in the country, who is to-day the chairman of the Finance Committee of the Conservative party, and is leading on their behalf the discussion in the House on the Budget. He said:
What we propose is Protection, pure and simple: Protection all along the line. We are going to do it promptly and we are going to do it effectively. A 10 per cent. tariff all round would be of no more use to the iron and steel trade than a sick headache.
The right hon. Gentleman's phrase was emphatic if it was not altogether elegant.
I am not going to mention any figures, but I will say that the emergency tariff, if it is to be of any use, must protect, and whatever we are going to do it will not be anything so crude and so feeble as a 10 per cent. tariff all round.
I think the Committee will agree that I have substantiated the point I was endeavouring to make, that neither the Labour party, the Liberal party nor the Conservative party is prepared to
advocate a traiff for revenue, and I hope that that proposal will disappear from our fiscal and financial controversies henceforth.
The Chancellor of the Exchequer has avowedly adopted one or two ingenious and temporary expedients in order to make his Budget for the year balance. Like his predecessor and like Autolycus, he is "a snapper up of unconsidered trifles", and the result has been that he has been able to balance his Budget without any severe increase of annual taxation. But he has only been able to do that by anticipating that there will be adequate economies in one direction or another in the course of the year to counterbalance the Supplementary Estimates which will be almost inevitable. He laid emphasis on the work of the Economy Committee. We on these benches who were responsible for proposing to the House the appointment of that committee felt not a little gratification that the Chancellor of the Exchequer should now rely so much upon the proposals that it may make.
He also made a very significant reference to the possibility of economies with regard to unemployment insurance. No savings in that direction can be made which would inflict hardship on those who are out of work through no fault of their own and for whom no further opening is available and who already, most of them, have little enough to live on in order to keep body and soul together for themselves and their families. But there may be, as we all know, abuses in certain directions, and I feel sure that the whole nation, irrespective of class, would desire real abuses, if they are established, to be remedied. I am quite certain that the feeling among the working-classes, the ordinary self-respecting hard-working artisan or labourer, does not approve laxity or abuses in the distribution of unemployment benefit. I earnestly trust that when the report comes up, if it is fair, impartial and reasonable, its recommendations will be received with unanimous acceptance and that the Government will not hesitate to rise to the height of their national duty and put into force, unpopular as they may be in certain quarters, such recommendations as may be made.
I am not sorry that the Chancellor of the Exchequer should not have proposed further increases of taxation in order fully to cover contingencies in the coming year. If he had asked the Committee to impose additional duties upon tobacco or beer or other commodities, which would have allowed an ample margin for possible increases of expenditure here and there to cover Supplementary Estimates and to leave at the end a large surplus to meet wholly unforeseen contingencies, he might have been praised for adopting a very prudent and orthodox method, and the Committee might have agreed to that taxation for that purpose, but I think that in the course of the year he would have found it much harder than he may now to insist upon economies in one direction or another. It is a good thing for the nation that the Chancellor of the Exchequer should be harassed, that he should not know where to turn in order to make ends meet and that when various proposals for increased expenditure come to him he shall be able to say: "My Budget only barely balances, and I cannot afford this increased expenditure. We must effect economies; otherwise, the Budget of next year will be greatly imperilled."
An overdraft at the bank in the case of some people is an excuse for reckless extravagance. They say: "I have an overdraft and whether it is a little more or less does not matter very much." But with most people an overdraft at the bank is a much greater incentive and stimulus to economy than a surplus; and so it is with the Treasury in this year. I can imagine that during the next 12 months the fact of the somewhat precarious nature of the balance will be an incentive to the right hon. Gentleman, and possibly to hon. Members behind him, to abstain from excessive expenditure and to insist upon further economies. The expedited payment of Income Tax next January will undoubtedly be a great hardship to a great number of people. It will be felt if not as a grievance at all events as a serious financial inconvenience, and perhaps the taxpayer will say that the only thing to be said in its favour is that it is a far better alternative than an increase in the amount of money that has to be provided during the year.
I am sorry that the Chancellor of the Exchequer did not say anything on the
question of the taxation of company reserves. In a year of heavy expenditure and inadequate revenue it may not be possible to give the relief which is desired, but we should have welcomed an indication that the matter was occupying the careful attention of the Chancellor of the Exchequer. We on these benches moved an Amendment on the Budget last year raising the question of Income Tax on company reserves, which is an important matter to the whole of industry in the country. But it is extraordinarily difficult to devise—[Interruption]—an Amendment which is thoroughly watertight, and the Colwyn Committee did not recommend this reform at all; in fact, they reported against it mainly for the reason that it was so difficult to frame any form of words which would be fully satisfactory, and, when some of my hon. Friends put down the Amendment they declared, when moving it, that it was recognised as imperfect—[Interruption]—and not such as they would desire to see in that form—[Interruption]. Hon. Members above the Gangway seem to be rather amused, but is it not the case that very often an Amendment is put down in the course of the Budget discussions for the purposes of debate. Hon. Members above the Gangway have taken the same course themselves—[Interruption].

Mr. LOVAT-FRASER: May hon. Members in this part of the Committee participate in the discussion between the right hon. Gentleman and hon. Members above the Gangway?

Sir H. SAMUEL: I beg the hon. Member's pardon, I was saying that the question of the relief of company reserves from Income Tax is a matter which requires the attention of the Committee and of the Chancellor of the Exchequer, but that it is a question upon which it is exceedingly difficult to frame a fully satisfactory Amendment. However, I hope in the course of the Debate that we shall be told the attitude of the Government to the principle and whether they think there is any practicability of carrying this much desired reform into effect.
There are two other minor points to which I desire to refer. I see that the net revenue of the Post Office has risen to the high figure of £12,000,000. It is
satisfactory from the point of view of the general taxpayer that so large a surplus exists for the relief of other taxes, but, on the other hand—I speak now as an old Postmaster-General—I suggest that it is not a desirable form of taxation to impose what is, in effect, a tax upon communications. In the exigencies of the moment it may not be possible to suggest a reduction, but I hope that the Chancellor of the Exchequer will bear in mind the necessity of allowing as much as possible of the Post Office revenue to remain in the business and to be used for Post Office development, particularly on the telephone side; and where possible to give further facilities to the public in the way of improved Post Office communications.
We are glad to observe that the Chancellor of the Exchequer so far from raiding the Road Fund is proposing to reinforce it by a loan. That is what we on these benches have been proposing for many months, indeed, for some years. From the time when we made our first inquiry we suggested that the proper course to pursue in times of bad trade was to raise large sums by means of loans and pay interest and sinking fund on the loans from the accruing revenue of the Road Fund. That is the course suggested in a most interesting report made by the League of Nations International Labour Office, which appointed a committee, representative of a number of countries, to inquire into the question of public works in times of unemployment. This wholly impartial body reported in clear and definite terms that the consensus of opinion, gathered from a large number of nations who were members of the League, was that it is a right and proper course to borrow capital which is idle in times of industrial depression and use it for public works. I am glad that the right hon. Gentleman, who hitherto has been somewhat antagonistic to this course, has declared that in this particular instance for the purposes of the Road Fund he is prepared to adopt that course.
Lastly, we rejoice that the right hon. Gentleman is proposing to carry into effect a reform which has been advocated by us for so many years—the taxation of land values. If only this country had been provident enough in 1848, when John Stuart Mill advocated a tax on these
lines, if only this method had been adopted 70 years ago, what a princely revenue would now be accruing to the State and local authorities without hardship to anyone?

Lieut.-Colonel FREMANTLE: What about agricultural land?

4.0 p.m.

Sir H. SAMUEL: That is a side issue. It is the enormous increase in urban sites which is important and which would have brought in a revenue. As long ago as 1891 Mr. Gladstone, in endorsing the Newcastle programme, approved of this reform, and if it had been carried out then, it would have been of enormous advantage to-day. My right hon. Friend the Member for Carnarvon Boroughs (Mr. Lloyd George) will speak upon this matter, in which he has a very special interest—[An HON. MEMBER: "He turned it down."] He was in bad company in those days. He cast his bread upon the waters many years ago, and it is now returning to him after many days. As my right hon. Friend the Member for North Cornwall (Sir D. Maclean) said yesterday, we on these benches will support these proposals, because in regard to the taxation of land values they will take a necessary first step toward the adoption of a reform for which we have very long contended, and which is generations overdue. We rejoice that the Budget is able to exhibit the vast financial resources which this country possesses under its Free Trade system, and, not least, we accept the proposals of the right hon. Gentleman because he relies for the balancing of annual finance not upon further taxation but upon further economy.

Mr. CHURCHILL: I shall not attempt to follow the right hon. Gentleman into the two topics to which his speech was mainly devoted, namely, a well-rehearsed lecture on the advantages of Free Trade, and a somewhat laboured exposition of the rather delicate tactics which he and his friends found it necessary to pursue in pressing the Government for the relief of taxation of company reserves. I shall deal with the general question of the Budget, and the House will, naturally, not be astonished if I say that I listened to the Budget speech with amusement, which almost rose into hilarity. I could hardly believe my ears as I heard the Chancellor
of the Exchequer unfold a long series of proposals which were virtually an acceptance, in fact and in form, of the financial measures and expedients which I devised and practised, and which he derided and condemned. As one by one those familiar shapes arose from the other side of the Table, and as I recalled to memory all the criticisms and scathing censures he had lavished upon each of them, I wondered whether I had not, perhaps, left behind some of my old Budget notes, and that one of his able secretaries had, by mistake, put them into the Chancellor's famous red box. Certainly, no Minister I have heard has ever given the House such an example of self-stultification. The opinions which he expressed were so recent, their form was so violent, the pattern of their reversal was so symmetrical and perfect, that whatever may or may not be said about his Budget speech, it will certainly abide for generations as a unique curiosity in Parliamentary annals.
Like his predecessor, the right hon. Gentleman was confronted with a financial emergency which he hoped would be of short duration. Like his predecessor, he was precluded from raising a large revenue by the easy and comparatively painless method of a general tariff for revenue. Like his predecessor, he recoiled from imposing further heavy direct taxation. Like his predecessor, he hoped for better times. Like his predecessor, he took capital assets to tide over what, he believed was a temporary emergency. Like his predecessor, he adopted a fixed Debt charge of £355,000,000 in satisfaction of all services and claims upon the Debt and the amortisation fund. Like his predecessor, he excluded from his calculations of the net sinking fund all borrowing by the Unemployment Insurance Fund. Like his predecessor, he called in aid a reserve—and it is a reserve—by expediting instalments on various Schedules of the Income Tax. Like his predecessor, he utilised a duty upon oil to meet, but, like him, only partially to meet, the expense of providing relief on rates to manufactures and agriculture.
Even the very form in which these accounts are now presented to Parliament in the exclusion of the self-balancing revenue and expenditure, in the separation of the Sinking Fund from the ordinary expenditure of the year, even
down to the intensified blue colour paper for the Financial Statement—in every step the right bon. Gentleman has followed meekly, and, I might almost say, reverently, those very footprints which the last tour or five years of his life have been spent in abominating. To-day I do not have to say "Ditto to Mr. Burke." I am even more fortunate. Mr. Burke has said "Ditto" to me, and I need not at the outset confess that these spontaneous tributes are gratifying to me in my present loneliness. I did not expect them so soon. But this is an age of speed. Every year the pace of life and the pace of motion increase, and so, I suppose, time's revenges have gone in for record-breaking.
The right hon. Gentleman's acceptance and endorsement of my financial administration has entailed, I gather, a similar conversion in the Liberal party. No critics were more severe or more unfair in the last Parliament than my Liberal critics of finance. Their authority on financial questions is great, and they do not proceed except upon the basis of life-tong established principles. They have followed out all the doctrinaire and orthodox theories of finance to their logical conclusion, and, consequently, when they have given their impartial opinion, not mixed up with the struggle between Conservatives and Socialists, it naturally carries special weight in the minds of the public generally. But what has happened to all those opinions now? I gather that they have all now become, in the main, favourable or, at any rate, instead of denouncing these practices of the Chancellor of the Exchequer as the worst violation of every principle of sound finance, the right hon. Gentleman passed them off airily as ingenious and convenient temporary expedients.
What is the explanation? What process of ratiocination has been at work? I do not see the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) here to-day, but it is clear that what has happened is that "When father turns, all turn." I accept their tributes, belated though they be, for what they are worth. I suppose a favourable verdict is always to be valued, even if it comes from an unjust judge or a nobbled umpire. The Committee will see that it would be somewhat difficult for me, in all the circum-
stances, to take a highly controversial line, and I am, therefore, sincerely grateful to my right hon. Friend the Member for Edgbaston (Mr. Chamberlain) for coming forward with what I must regard as prophetic magnanimity to relieve me from a long-drawn task of criticism and opposition to this Budget which it is, undoubtedly, the duty of those who sit on this side of the House to fulfil. It falls to me only to make from time to time a few comments upon the strange scene of our finance this year, and I am very glad to be able to do so with complete freedom from all considerations except the merits and demerits of the case.
I shall set myself to test this Budget upon two main questions: first, how far are these proposals in themselves sound or unsound, wrong or right; and, secondly, how far is the Budget, taken as a whole, appropriate to the serious situation in which we stand? Upon the first question, I have already recapitulated the extraordinary resemblance and continuity of method and of outlook between the financial policy of the present Socialist Administration and the financial policy of the late Conservative Government. I use the word "Government" advisedly, because the Chancellor of the Exchequer does not produce the Budget in the name of a great party without having carefully submitted it to the principal colleagues on whom that party relies. In the late Cabinet I had the very great advantage of the presence of no fewer than three ex-Chancellors of the Exchequer—an unpopular breed, no doubt, but none the less powerful for that. And it was my custom and my duty, not only to secure the assent of the Cabinet to the annual Budgets, but to discuss their details long in advance with the Prime Minister and with my two eminent and fraternally united colleagues. I do not recall any differences that developed between us upon the many difficult decisions with which we were confronted.
Therefore, I say that in all the resemblances which this Budget bears to previous Conservative Budgets, the Chancellor of the Exchequer, at a cost, no doubt, of a complete personal tergiversation, has at any rate placed himself upon solid ground and ranged himself with most respectable authority. But
there are not only resemblances in this Budget; there are differences upon which a considerable structure of legitimate and consistent criticism ought to be founded. Some of these differences I shall endeavour to explain. Like the Chancellor I shall begin with the fixed Debt charge. We thought in 1928 that the reinstitution of the fixed Debt charge, which was sanctified by principles avowed and practised by Mr. Gladstone and Sir Stafford Northcote—we thought that the reinstitution of the fixed Debt charge to cover the interest, the sinking fund and the detachment of savings certificates, was a far better way of dealing with this oppressive problem of the Debt than by making a provision from year to year of such sums as were actually needed on these Debts. The fixed Debt charge removes from national finance a whole series of erratic and uncontrollable fluctuations which in one year give an appearance of a false economy and in another year the appearance of an equally false extravagance.
We preferred as far as possible to separate controllable from uncontrollable or partially controllable expense, and we established a fixed Debt charge of £355,000,000 which, if it was adhered to for 47 years more, would completely extinguish our National Debt. This method, no doubt, deprived the base and ignorant of a certain number of cheap scores from time to time upon the fluctuation in the total of our expenditure, but it had the great advantage of focusing before the eyes of the House and the country the preventible and optional expenditure of the Government in any year, free from the confusing external facts. The right hon. Gentleman was not content with this provision of £355,000,000, and on his assumption of office he set himself a far higher standard; he went out of his way, and needlessly, as we told him at the time, to add the deficit of the 1929 Budget, to add his deficit of my 1929 Budget—I think he had as much almost to do with the deficit as I had with the Budget—he went out of his way needlessly to add that deficit to the Debt provision of the next three years; and in a frenzy of self-righteous animadversion he actually set a Clause in the Finance Bill, to act for all time as a warning to Chancellors of the
Exchequer, whereby automatically, unless the House intervenes, the whole deficit of any year would be added to the Debt provision for the next year. I was rude enough in the Debate last year to describe this Clause as mere eye-wash. Looking back I cannot feel that that term erred at all, except, no doubt, in lack of ceremony. The first and only Chancellor of the Exchequer to fall under the ban—for it is now to be removed by the hand that set it up only a year ago—is the right hon. Gentleman himself. We have all heard of how Dr. Guillotine was executed by the instrument that he invented.

Sir H. SAMUEL: He was not!

Mr. CHURCHILL: Well, he ought to have been. We know of the engineer who was hoist by his own petard, the stricken eagle which nursed the pinion that impelled the steel, and we see a much more perfect example in the right hon. Gentleman sitting in his place to-day. Being of an amiable disposition I will forbear further to aggravate the wound which he has himself inflicted. I will content myself with recording the important fact that this fixed Debt charge of £355,000,000, in the setting up of which I was greatly aided by my right hon. Friend the Member for West Birmingham (Sir A. Chamberlain), pursued over the years across all their varying conditions, taking the rough with the smooth and the good years with the bad years, is in fact recognised by all parties as an adequate provision for our release from the frightful burden of the National Debt.
It has never been the custom for the borrowings for the Unemployment Insurance Fund to be set off against the net sinking fund. The Chancellor of the Exchequer has taken to this somewhat devious and questionable practice like a duck to water. Not the slightest difficulty this year in getting him to keep these two ideas in quite separate compartments in his mind. But surely the figures involved alter the case? I have always held the view that the Unemployment Insurance Fund, resting as it does upon important revenues of its own, could carry within certain limits a reasonable loan account of its own, and that was the position in our time. But when, either through grave national depression or partly through lax administration, the loan charges rise to
£70,000,000 or £80,000,000 or perhaps £100,000,000 in a very short time, it is perfectly evident either that the cause of the expenditure must be curbed by economy, or that some entirely new provision for funding this ever-growing debt will have to be brought into effect.
Next I come to the Oil Duty. I may claim this Duty as being a great success. It has produced, up to the present, practically no increase in the price of petrol. All that it has done is to intercept for the Exchequer the relief which would otherwise have come to the motoring public from the fall in price. All the administrative difficulties were surmounted in the original tax. There is nothing to be said against the tax, except that all taxes are bad. There is nothing to be said against the tax half as bad or a quarter as bad as what the Chancellor himself said yesterday. I think he is justified, before all tribunals except his own, in increasing this Duty upon this occasion. We shall now be deriving more than £25,000,000 of revenue from the Petrol Tax, and that is a very fair set off—it comes within £10,000,000 of the total expense of all the rating reliefs which the right hon. Gentleman inherited. He is getting from this tax alone £25,000,000, towards the £35,000,000 that he had to provide. There is a certain gap, I agree. After this year, when the £4,000,000 in reserve are used up, there will be this gap of £10,000,000; but in the main the cost of that immense relief of transference of expenditure from the most invidious form of taxation upon industry to the Exchequer, has practically been borne and sustained by the Petrol Tax. So I hope that any future howlings on the subject will be kept within the reduced limits within which they would be proper.
Then there is the provision for expediting the instalments under the various Schedules of the Income Tax. When we applied this principle to Schedule A it yielded £17,000,000 in the single year, as against the £14,000,000 which I estimated. I am sure that it was the right thing to do at the time, and I was not aware, while the process of collecting it was going on, that any exceptional hardship was being inflicted. At any rate, there were hardly any complaints, hardly any
difficulty in collecting it. For two successive Budgets I looked hungrily at the other Schedules. The right hon. Gentleman must not suppose that I did not, with appetite in my eyes, examine all these possibilities. Why did I not avail myself of them? It was because I was warned of the very serious differences which existed between applying this principle to Schedule A and applying it to the other Schedules. My advisers who first made me aware of the possibilities of Schedule A, when I discussed the other Schedules produced arguments which alarmed me so much that I left them severely alone. It was pointed out that there were great numbers of small people who could not get the same accommodation from their banks for the six months that the majority of Schedule A taxpayers are able to secure, and that the payments would come in just at Christmas time, when so many heavy charges fall upon the small householder.
We had last night from my hon. and gallant Friend the Member for Kelvingrove (Major Elliot) some figures of great interest upon this point, and I think it would be a very good thing if the Chancellor of the Exchequer and some of his advisers had the opportunity of looking at those figures, which perhaps are not fully found in the report. Only very serious reasons deter me from availing myself of this method, and those serious reasons confront the Chancellor to-day. He has rushed in where I feared to tread, and I have no doubt that he will encounter a very keen and considerable outcry and resistance, and that there will be many cases of real hardship and embarrassment resulting from this, the necessary treatment and mitigation of which may affect to some extent the yield of the tax this year.
With regard to the £20,000,000 of transfer from the exchange account, I agree that the establishment of the International Bank and the arrangements for the payment of contributions which constitute the wealth of that bank in dollars, render this sum of money available. But that this money, originally borrowed money, the produce of an unbalanced War-time Budget, should be used to defray current expenditure instead of being devoted to the cancellation of Debt, even beyond the limits of the fixed Debt charge, will be held in all quarters to be
a violation of the canons of sound finance, and it strips the Chancellor of the Exchequer of every vestige of financial orthodoxy.
There remain only the land taxes about which we are to hear to-morrow or Monday. Until we know precisely what those taxes are it is of course impossible to discuss them, but I hope that the right hon. Gentleman is not going to throw out a complicated scheme, in a speech or in a paper, and expect the House to form its judgment and opinion upon that without some reasonable interval for the study and examination by experts and actuaries and accountants of these highly-complicated and technical projects. I shall not attempt to discuss the matter this afternoon, because it has, of course, nothing whatever to do with this Budget, or the next Budget or any Budget for which the right hon. Gentleman is likely to be responsible. If these land valuation proposals are empty of money they are quite full of polities, and I only express the hope that their political aspects will be studied with as much care on this side of the Committee, as they have evidently been studied on the other side.
When we saw with what interest and stress and eagerness the right hon. Gentleman fastened upon these proposals, and how he saved them up for the end as the rare and refreshing fruit, the dessert that was to conclude the somewhat restricted meal which he provided—when we saw that, it was made quite clear that he is using these taxes, not for any fiscal or financial purpose, but as a means of arrangement and negotiation with the party below the Gangway on this side and in the vain hope of satisfying hon. Members on the benches below the Gangway opposite. Of course, these are very old ideas. I think that the right hon. Gentleman below the Gangway told us what Mr. Gladstone said in 1891 upon this subject, and we have all seen for 50 years their merits and demerits canvassed. Well, that is all that Socialism gets out of it. The right hon. Gentleman used these taxes as a means to show that, if he had ceased to be a Socialist, at any rate be was a good old-fashioned Radical. Poor unlucky I.L.P.! Forlorn New Party men! Socialism in our time as dead as mutton! But, never mind. Radicalism, not in the Chancellor of the
Exchequer's time but some time or other, may, perhaps, hold out some glittering possibility. There is their consolation prize. If they are content with that, if they are satisfied with that, if that is all they are requiring now, then all I can say is that the influence of the Parliamentary atmosphere must be of a most potent character.
In the short time that I propose to trespass further upon the indulgence of the Committee I come to the second inquiry and the larger aspect of the Budget, namely, its wisdom and opportuneness as a whole. The task of a Chancellor of the Exchequer is always thankless. If he taxes he is abused by the victims. If he fails to tax he is insulted by the pedants. If he is simple, he is clumsy; if he is ingenious he is tricky. If he spends it is a rake's progress, and he can only save by dismissing persons from their employment. Whatever course he takes he must encounter not only fierce criticisms but valid criticisms, and no course which he can take can possibly avoid those criticisms. It is only upon very broad lines that the action which he takes can be fairly judged.
How, then, stands the Budget as a whole? There is a unity of conception about this Budget. The note which it strikes is clear. Its simplicity has not been obscured to any serious extent—apart from these land tax proposals which are not really a part of the Budget—by the kind of spiteful partisanship to which sometimes I have had to draw the right hon. Gentleman's attention as being a disfigurement upon his attractive public career. Its purpose is modest. Its purpose is none the less sensible. I do not think myself, and I am giving my personal opinion, that the Inland Revenue estimates, apart perhaps from stamps, are inflated. The Income Tax estimate is not a guess. Samples of 30,000 firms are passed under review. The most elaborate logarithms and curves are drawn to show all the different results of varying rates of collection and so forth. The officials are of the highest competence and their estimates hardly ever err, except on the side of safety, and I do not believe that the right hon. Gentleman is the kind of Chancellor who would screw up the figures without the most careful regard to the facts.
There are, no doubt, great uncertainties overhanging some of our external receipts. I do not dwell upon those uncertainties partly because of their gravity and also because I hope that they will clear themselves up in a satisfactory fashion. If they do not, then they will entail an entire recasting of our present financial affairs, but there is, undoubtedly, in the proposals of this Budget a gap between permanent revenue and permanent expenditure of anything from £30,000,000 to £40,000,000. At present that gap is filled only with hope and good resolutions. But one thing is vital to the right hon. Gentleman's policy this year and to the Budget which he has introduced, and that is resolute economy. The right hon. Gentleman owes it to Parliament and owes it to himself to vindicate this daring Budget—and I do not say that it is a wrongfully daring Budget because I think that he has dared in the public interest and not in any personal or party interest—by effecting the reductions in expenditure upon which alone its solvency depends. In this he should be aided, and will, I am sure, be aided by all parties in the House.
The Budget marks a very great decision. It is not the decision which the right hon. Gentleman paraded so eagerly on Monday. This Budget will not be memorable for the political manoeuvres connected with land taxation proposals or land valuation proposals. It will be memorable for the fact that the Socialist Chancellor of the Exchequer, in spite of party pressure, in the teeth of the whole doctrines of his life, has declared by action, which is louder than words, that in the present circumstances the limits of direct taxation have been reached. There is the message in the Budget imparted to us by lips whose reluctance to utter it is the measure of its irresistible force. There is the bleak revelation, thrust silently but brutally before British Socialism. That is the all-important recognition which the Chancellor of the Exchequer has made of facts and of his contact with realities, and it is a recognition, made not only by the Government, but, as I gather, by their Liberal allies. We do not know all the reasons by which the Chancellor of the Exchequer has been actuated, but we can judge from his action how grave and urgent some of those reasons must have been. Looking
out behind the scenes upon the whole field and structure of British trade and industry, he has come to the conclusion, greatly against his party interests and feelings, that the most burdened and most loyal class of taxpayers in the whole world have reached or nearly reached their breaking point—

Mr. HOFFMAN: In present circumstances.

Mr. CHURCHILL: All right, in present circumstances—and that further pressure, at this juncture, would result possibly in an even more widespread collapse of enterprise than that which we are now confronted with and would possibly be coupled with an actual diminution and would certainly not be attended by any proportionate increase in the yield of the taxes themselves. He has had the courage—and he has never wanted any kind of courage as we have seen—he has had the courage, and, I will add, the public spirit, to set aside his own convictions, to defy his party's pressures, and to do what he deems to be his duty to the country.
Very far-reaching conclusions can be drawn from that, decision of the Chancellor of the Exchequer. It spells the doom of all those airy, visionary Socialist programmes of creating some new Utopia through the agency of the tax-collector. It reveals the bankruptcy of the Socialist programme. It reveals more than that. If the social services of this country, freed from abuses as they ought to be, are to progress, as I trust they will, in the immediate future, it can only be through the institution of systems of indirect taxation on a far greater scale and in a far higher proportion than anything that has yet been contemplated. I agree with my right hon. Friend the Member for Edgbaston in what he said yesterday. The compulsive need for revenue must bring the tariff. The tariff brought, by the need of revenue, must become the agency by which the growing importance of the home market will be emphasised. The institution of the tariff will afford occasion for striking those new bargains with foreign countries which are necessary and which, wisely handled, may play an important part in welding together the production and consumption of our Empire, before the present process of dispersal and disintegration has reached its fatal end.
When we survey the various alternatives which were before the right hon. Gentleman, I cannot myself say that he has not judged rightly. Suppose that he had put £20,000,000 or £30,000,000 on the direct taxpayer—he could have used the plausible argument of the Revenue returns of last year—he would have had loud cheers of triumph and of appetite from the benches behind him; he could have used this sum of money to gain the encomiums—I believe that is the word—of the financial purists for the great provision which he had made for the Debt, but he might well have struck a deadly and possibly a fatal blow, at a most critical moment, at the whole trade and business life of our country.
He has taken the right course; he has rejected that alternative; he has endeavoured to nurse the country round a most dangerous crisis in its illness. I cannot regard his action as other than a friendly and responsible gesture. He has sought to gain a breathing space. Do not let us throw that breathing space away. Precious, fleeting months must not be wasted by British industries. Often we have heard them say, "Leave us alone." Well, anyhow for a space, they are left alone. The cloud of the Budget which overhung all business affairs for the last few months is lifting. The arrangements and the policies adopted by or forced upon the various party leaders have apparently removed the probability of a general election. There is no power behind this Government to carry any serious legislative projects of a revolutionary or injurious or violent character into law. They have lost confidence in themselves, and, however wisely guided they have been, they have abandoned contact with all those distinctive, characteristic themes to which the birth and vitality of their party have been due.
Party politics, pushed to extremes, seem for the time being to have reduced themselves to something very like deadlock and equipoise on all sides. The State, for good or ill, in the next 12 months will have little to contribute, in national guidance or misguidance, to industry. One can certainly say of such a situation as one can say generally of the Budget, "It might well be worse." Let us make sure that the strength and resourcefulness of all our citizens is
exerted in that interest while they are, at any rate for a space, freed from uncertainty, and, while British politics axe coming to their senses, let us see what British industry can do for itself.
This is no time for complacency, nor is it a time for despair. I am deeply concerned, not only about our world position, but about the continuing ability of this island to afford the means of expanding livelihood for its immense population. Never, even in the darkest days of the War, except perhaps in April, 1917, during the culmination of the submarine crisis, have I personally felt so much anxiety about public affairs, but my faith is also strong that we shall recover, that we shall not be the last of the nations to find our way through the perils and perplexities of the present world situation, that the resources and resiliency of our Empire will not be unequal to our trials, that faction will fade as difficulties deepen, that unity and design will emerge from confusion and futility, and that we shall not be reprived, at any rate through our own fault, of our future and of our inheritance.

Captain HAROLD BALFOUR: We have listened to the speech of the right hon. Member for Epping (Mr. Churchill), with which I feel we are all in hearty agreement as regards the certainty that in the long run the country will get out of its present difficulties, in spite of politics, politicians, and political parties. The Chancellor of the Exchequer has put forward an optimism as regards a trade revival which I am sure everybody on this side hopes will be fulfilled. Nobody concerned in industry could object to the optimism which the Chancellor has shown, did they really feel that that optimism for the next 12 months was likely to be justified. I think that that optimism was most clearly demonstrated in his estimate of £4,000,000 more from the Stock Exchange Stamp Duties, when the Stock Exchange barometer of to-day is more depressed than it has been at any time since the slump of 1921.
Putting off the evil day is very good if you are going to face up to the ultimate issue in the long run; and to spurn the weapon of tariffs, which the right hon. Member for Epping has just spoken about, is excellent if you are consistent
in your actions throughout. But when we see the Chancellor of the Exchequer spurning that weapon of tariffs and putting what is a highly protective tariff on petrol, in view of the fact that home-produced petrol and home-produced oils are free of duty, and foreign oil is to be taxed still higher, when we see the Chancellor of the Exchequer party to a Government which protects one of the basic industries of this country, the coal industry, which protects the gas industry, which protects the electric light industry, by fixing the minimum charge at which an essential raw material for these commodities is to be sold, one begins to wonder whether his consistency is logical. Economy is excellent, and all parties have given lip-service to economy, but it is necessary to face up to that issue.
Yesterday, the Financial Secretary to the Treasury asked three questions, when he was twitting this party with a lack of the application of the principles of economy in the plans which they have put before the country. He dealt with the question of the Unemployment Insurance Fund, and said to us "What are you going to do with the annual charges of that fund? Are you going to put them on to the rates? If you take off the men who are not actuarially entitled to benefit, are you going to put them an the rates, or on the Exchequer, or are you going to reduce the benefit?" Those were his three questions. All unpleasant and difficult questions must be faced up to, and I would say most definitely that we must reduce this fund to a sound basis. Those who are uninsurable from an insurance point of view must be put on to some form of Exchequer scheme, which would be administered not in the way of shovelling out money regardless of claims or of the right to entitlement to that money which exists at the present time, and that that money should not be shovelled out freely, carelessly, and happily, as it is to-day, without some quid pro quo from those who are receiving the money of the taxpayers.

Mr. MAXTON: That is not facing the question.

Captain BALFOUR: The question how that is to be done will very largely, I suspect, be found in the report of the Royal Commission on Unemployment In-
surance, a report to which the Chancellor of the Exchequer says he is going to pay grave attention, even though some hon. Members opposite may not so wish.
There is one point that I would like to touch on in the proposals before the Committee, and that is the Land Tax. The Chancellor of the Exchequer said that certain Conservatives would meet this fear of the land taxes fairly and squarely, and that on all sides of the House he anticipated that this tax would be welcome. One cannot welcome something that one does not know of, but let me say for myself and some of my friends that there are those in this House who knew not 1910. The gladiators of our Front Benches who fought in 1910 are beginning to take up the position of 1910 again, and the old battle cries have started again. There are some of us who do not want to prejudge that issue. We say that if there could be some fair and reasonable scheme which would enable the urban site values which have been built up as a result of moneys provided by ratepayers, one would look at that scheme on its merits and not according to 1910.
We must not judge the position now by the prejudices of 1910, but by the exigencies of 1930. Let me say that my friends and I feel that if this touches agricultural land, it must be opposed bitterly and in every stage, that if it touches land which is used for agriculture still, even though it be alongside a main road, we must oppose it bitterly and in every stage, that if it touches land the value of which has gone up through development of private enterprise, we must oppose it bitterly and in every stage, and that if it is land which has an increased value through urban development, we could only recognise some form of fair taxation of the increment if that land could be proved by some definite sale to have an increased value.
The right hon. Gentleman the Chancellor of the Exchequer is faced by this deficit of £23,000,000, but I could not help feeling what comfortable words he spoke for everybody when he said that on the basis of some foreign Budgets and commercial practices, instead of a deficit of £23,000,000, the year would have closed with a surplus of £43,000,000.
That, indeed, is a comfort to those who are in peril with their banks, who are improvident in their homes, and who are affected with debt or doubt or financial trouble, because you have only then to turn to the Chancellor of the Exchequer's words, and say, "If I do not pay what I owe, if I do not fulfil my obligations, really I am a very rich man and quite comfortably off."
5.0 p.m.
One cannot but wonder what the political significance of the present Budget will be, whether all the hon. Members on the back benches of the Labour party will be pleased with the lead given them by the Chancellor of the Exchequer. History repeats itself, and you can usually find in history the parallel to every present situation. The Chancellor of the Exchequer seems rather like Moses, leading the lost tribes across the desert. For two years we have watched that slow trek across the desert towards the Socialist Utopia which hon. Members opposite are trying to achieve. For two years they have sought the Promised Land, always led by the Chancellor, who has had one of his colleagues on his left, either the First Commissioner of Works or the present Chancellor of the Duchy of Lancaster, always willing to sing a Socialist song to cheer them up and to conjure up the mirage of the beautiful Promised Land. For two years the trek his gone on across the desert, ever swept, as the Chancellor says, by the economic blizzard. Suddenly, the Chancellor turns round when the tribes are getting a little troublesome and fractious among themselves, and says, "Boys, we are lost. I do not know if there is a Promised Land; but, if there is, I am sorry that I have taken the wrong turning. As for myself, I am going to 'stay put' for 12 months. I do not know what to do. I dare not turn back, because I may have to face a tariff wall. I dare not go on, because I may be engulfed by the drifts of the economic blizzard. I am going to do the ostrich trick and put my head in the sand and forget my troubles. I shall put twopence more on petrol, a little squeeze on the blighters who gave me the wherewithal to start but who will not produce the wherewithal to finish the journey and I shall utter a cannibalistic threat to the capitalistic landowners. That ought to keep them quiet. I will
'stay put,' and perhaps in 12 months' time, when I take my head out of the sand, the economic blizzard may be off, or the trek may be off, or even I may be off, but for the present time, boys, the deal is off."
That seems to be the present situation. The country looks with some gratitude to the Chancellor on the one hand for not proposing charges which his comrades would have him impose on industry for the sake of political theories. We have at the same time grave fears as to what will happen when the Chancellor takes his head out of the sand. When he does that, however, we need not worry, because he will not be on that side of the House, but on this, and we shall be forming a Government and marching towards the sane, solid progress which is based on the Conservative policy of trying to help to foster industry with the realisation of the ultimate utter dependence of every man, woman and child of this country upon industry, and of the fact that industry cannot be the plaything of politics which for these past two years it has been until this moment, and as hon. Members would have it at the present time. Only when industrial life can be carried on free from political objects sacrificing its every need, only when industry can be carried on, not in a spirit of political rancour, but each participant giving of his best for the whole, can it succeed and this country progress again to prosperity.

Mr. R. A. TAYLOR: The hon. and gallant Member for the Isle of Thanet (Captain Balfour) has assured the House that history always repeats itself. That sweeping statement is just us unreliable as the other portions of his speech, for history is simply the interpretation of a number of facts and tendencies by individuals, and is not in any sense a complete record of the facts; and history, like everything else, does not always repeat itself correctly. The hon. and gallant Member proceeded to say, as so many other Conservative Members say, that it is necessary for the Government to practise economy at the expense of the poorer sections of our population. We have in the country, unfortunately, some 2,500,000 men who are not able to obtain the normal amount of work that they desire, and the hon. and gallant Member has actually suggested that the
workman who is drawing transitional benefit shall be put in a separate category and segregated from the rest of the unemployed—and treated, I presume, in the spirit of the Poor Law, and as people who are not entitled to maintenance as a matter of right, but who are to be given it as a matter of charity. Now, at least, we know exactly what the Conservative party stands for.

Captain BALFOUR: I am sure that the hon. Member does not wish to misinterpret me. What I said was that we should have a separate Exchequer scheme for those who are uninsurable. I said nothing about the spirit of the Poor Law, and I am sure the hon. Member will withdraw the imputation that I wish to get the Poor Law spirit into it.

Mr. TAYLOR: What is the object of segregating unemployed people from their fellows unless you want to treat them on disadvantageous terms?

Captain BALFOUR: A man in any actuarially sound scheme draws his benefit because he is entitled to it in the light of his contributions. Under an Exchequer scheme, a man would have to give a quid pro quo, probably in the form of labour in some State-aided employment, or possibly there might be a subsidy to his firm in order to enable him to be employed. That is the difference.

Mr. TAYLOR: The only inference I can draw from the hon. and gallant Gentleman's explanation is that the kind of quid pro quo he has in mind is the kind that has been practised by the London County Council, controlled by the Conservative party, which has been paying relief of 3s. a week to men and imposing 40 hours labour for it. If that is the spirit in which that particular class of unemployed are to be treated, we cannot look forward to any era of social peace in this country, because there are not many Members on this side who would tolerate the treatment of the unemployed in that way.
We are all glad that the Chancellor of the Exchequer has been restored to health, and that he has stood so well the ordeal of presenting a very difficult Budget. Most Members of the House will rejoice that, by comparison with countries like the United States of
America, with a deficit of something like £160,000,000, or protectionist Germany, with a deficit of something like £60,000,000, this country is standing up to the difficulties caused by the world crisis far better than some other nations which already enjoy the benefits of Protection or Safeguarding, which are so often urged from the opposite benches as a means of remedying our difficulties. The deficit in last year's accounts was largely accounted for by a declining revenue and increased expenditure, both of which were due to causes in the main outside the control of the Chancellor of the Exchequer. The £7,000,000 decline in the receipts from Stamp Duties is an indication of the general depression of trade and the decline in Stock Exchange activities. A sum of £3,750,000 represents the decline in the standard rate of Income Tax, but, curiously enough, the revenue from the higher grades of Income Tax payers as represented by the Super Tax payers, has actually shown an increase. A sum of £7,250,000 has been lost in the receipts from Customs and Excise; and the receipts from motor ears are down by £1,250,000. The Government have had to bring forward Supplementary Estimates for £10,500,000 to provide transitional benefit for the un employed.
If we analyse the causes of these deficits, we shall see that in the main they have been due to forces quite outside the control of the Chancellor of the Exchequer. We know the tremendous fall in the price of almost every commodity produced for the world market, and that over a large part of the earth, notably in Spain and in Central and South America, revolutions have taken place. These two factors—the fall in commodity prices and political disturbances—are at the root of most of the difficulties with which the Chancellor was faced and which led to the deficit of £23,000,000. The estimates in this year's Budget provide for a revenue of £776,000,000 and an expenditure of £803,000,000. The Chancellor proposes to meet the deficit by appropriating £20,000,000 from the Exchange Account, £10,000,000 from the alteration of the instalments of Income Tax, and £8,000,000 by an increased Petrol Duty. In the circumstances, the Chancellor is to be congratulated upon the astuteness and agility which he has displayed in
finding the temporary expedients which have enabled him to provide for the £37,500,000 that he has to find without substantially increasing the tax burdens of the country.
There are one or two statements made during the Chancellor's speech which filled me with a certain measure of apprehension. The right hon. Gentleman told us:
I am confidently expecting that, as the outcome of the recommendations of the Economy Committee set up by the vote of all parties in the House, considerable reductions of expenditure will be made during the year, which will automatically go to Debt reduction. It is also possible that during the year conditions may be favourable for considerable Debt conversion operation."—[OFFICIAL REPORT, 27th April, 1931; col. 1397, Vol. 251.]
I do not see how it is possible for any economy committee to bring down the total national expenditure by any considerable amount. If it can be demonstrated beyond doubt that there are abuses in connection with unemployment insurance administration, they should be dealt with at the earliest possible moment, but nobody who knows anything about unemployment insurance administration and the system by which the claims to benefit are determined, can for a moment assume that any economies as the result of the removal of abuses can amount to any considerable reduction in the sum expended. It would be the falsest possible economy to attempt to cut down the unemployment benefits received by the mass of the recipients because the more that is done the less purchasing power there will be to circulate in the very areas where trade is most depressed. Such a policy would damage not only the unfortunate people who are out of work, but the tradesmen who are dependent upon their spending power. Out of a total expenditure of £677,000,000 on the Civil and Consolidated Funds, about £620,000,000 is represented by obligations that the Chancellor of the Exchequer must discharge in any circumstances; they are obligations which are fixed by Acts of Parliament or by Royal Warrants.
I am all for economy, if it is the kind of economy which is wise in the interests of the nation, but there is a false economy which, I am certain, is doing very great damage to the national interests and is the cause of a considerable amount of
unemployment. Instead of economy, the Chancellor of the Exchequer might adopt as a slogan, "Spend wisely, and save your country." At present, the nation is saving far too much. There is no shortage of capital equipment with which to carry on production or to pay for any imports that may be necessary, and whilst everybody recognises that savings create the fund from which the supply of new capital is obtained it is obvious that serious economic damage can be done if people save too much, even during a period of depression. If everybody were suddenly to begin to save the whole of their income, except such part of it as it was necessary to spend to keep body and soul together, it would produce an even worse paralysis of trade than we now have, would, indeed, lead to a complete disaster. It is equally clear that if everyone spent all they received, and nothing was saved with which to provide the capital which a modern economic system needs, disaster would overtake us, and social progress would come to an end. But somewhere between those two extremes there is an ideal point, and if at the present time people could be induced to spend more and to save less it would help to remove a considerable volume of unemployment. The Chancellor of the Exchequer made a significant reference to our social services. He said:
It is in times of prosperity and abounding revenue and of Budget surpluses that we can afford to lessen the intolerable burden of debt and to liberate resources for schemes of economic and social reform."—[OFFICIAL REPORT, 27th April, 1931; col. 1397, Vol. 251.]
I understand from the Chancellor's statement that this year a sum of £355,000,000 is provided for the interest and sinking fund on the War Debt, and that even in this period of unparalleled depression the Chancellor thinks it is wise to retain the Sinking Fund laid down by the Act of 1928. I entirely dissent from that view. The Chancellor, of course, has the advantage of a great mass of detailed information such as is not at the disposal of a back bencher, but it seems to me that instead of restricting social services during a time of depression we ought to concentrate upon extending them and increasing the supply of money available for spending by the masses of the people, who must spend money for
necessary goods, many of them produced inside this country.
It would have been a greater national advantage if the Chancellor had seen his way clear to extract more from that altogether useless and parasitic element in our national life, the rentier class, who, through the ownership of fixed-interest bearing securities, are now taking something between one-quarter and one-third of our total national income. The real burden of the sums taken in the form of interest on mortgages, debentures, War debt and all other forms of fixed-interest bearing securities is at least 60 per cent. higher than it was in 1920, when taxation was supposed to be at its zenith, and in a time of unparalleled depression it would have been good policy to put a special tax upon fixed-interest bearing securities and to have applied the money to the alleviation of some of the undeserved poverty and destitution of sections of our population. The rentier class to which I have referred lives by investment, much of it in foreign countries. Some of their investments, by establishing competitive concerns in low wage countries elsewhere, damage British trade, and a tax ought to have been put upon incomes from that source, and the money thus obtained transferred, through unemployment benefit or old age pensions, to those who are trying to face up to life in difficult circumstances. There are men with a lifelong record of industrial service who, at 65 years of age, find themselves ineligible for unemployment benefit; and if, as is commonly the case, their wives are three, four or five years younger than themselves they have to face up to life on 10s. a week old age pension in place of the unemployment benefit. I do not for a moment subscribe to the theory that this country has reached the stage when it is not in a position to meet their claims
The Chancellor of the Exchequer admitted in his speech that unless trade improves next year there will be no alternative to a reduction of expenditure or an increase of taxation. The Chancellor is budgeting for a balance of only £134,000, and so it is perfectly clear that his hopes of balancing his Budget next year are dependent on a trade revival. It is fair to assume that under
the normal working of economic laws some of the causes which have produced the present terrific world depression will work themselves out, and that there will be a more favourable atmosphere at the end of next year; but, unfortunately, many accepted economic theories have been completely upset by experience in the post-War world; and unless the Chancellor stands up to the banking interests of this country and compels them to take steps to restore the conditions necessary to prosperity, I am of opinion that when we meet in 12 months' time we shall not see any very substantial improvement. In view of the variety of the factors which control world depression or world prosperity, it is quite possible, indeed, that things may be infinitely worse.
May I draw attention to what I believe to be the greatest single cause of our present position? During the War all the nations engaged in it departed from the principles of sound currency as represented by convertibility into gold, and proceeded, by the method of inflation practised in varying degrees in different countries, to move away from the conditions of pre-War monetary stability. In some countries the process went further than in others. In some countries, through this process, the currency completely collapsed. In France and Belgium it was kept within measurable bounds, and eventually there was a conversion of the paper to a new ratio of value with gold. In this country we adopted a policy which has thrown tremendous burdens upon the creative forces in our nation. We attempted to bring back a paper pound worth about 7s. to parity with gold. What have been the consequences? We have, since 1920, gone through a period of prolonged deflation, with the result that enterprise has been killed, that our export industries have been half ruined, and our great basic industries, which depend upon export trade for the sale of their products, have been robbed of the money with which to re-equip themselves and rationalise their methods of production.
It is true that there have been certain compensating advantages, but nobody can deny that, through the fall in prices, the tremendous burden of national and local taxation is pressing upon the people with increasing severity, and that in the inter-
national aspect of this problem the fall in prices, due in the main to the mishandling of the return to the gold standard, has produced a situation which, if it is not dealt with, will create revolution in Europe within five years and revolution, probably, in the United States of America as well. It is clear to anyone who devotes five minutes' thought to the problem that, in a world complicated with great international debts and great internal debts, the great debtor countries which, with the single exception of Germany, are mainly food producing and raw material producing countries, will, with the present level of prices, be unable to meet their obligations, and will continue to be unable to buy the products of manufacturing countries.
From time to time many learned economists have given us the benefit of their great knowledge on this problem. Some say the position is due to the mal-distribution of gold, and that all that is needed to set the system working again is the redistribution of the world's gold supply; that then prices would begin to recover and all would go well. I fail to see how any transfer of gold from Paris or New York to other countries can set the machinery going again. The fact of the matter is that we have now reached the stage in which the command of gold over commodities has been almost doubled, and in some cases rather more than doubled, since 1920. During last year we have seen the United States of America acquiring another £90,000,000 of gold over and above that which she had already accumulated, and France acquiring another £60,000,000 of gold, and from the treatises written by the economic experts we are all able to trace and explain the economic causes of those movements of gold. What we are not able to solve is the problem of restoring prosperity and trade to the world as a whole.
As I see this problem of world trade stripped of all the trimmings, it is fundamentally an exchange of foodstuffs and raw materials for the manufactured goods of industrial countries. The food producing and raw material producing countries want to sell their products, and the manufacturing nations want to sell their products, and yet we are unable to adjust these matters through a breakdown in the financial mechanism. The low prices received for foodstuffs
and raw materials prevent the areas where they are produced from buying the manufactured goods of the industrial nations at the prevent level of prices and the same cause prevents the food producing and raw material producing countries from buying the manufactured goods necessary to meet their requirements. So far as I understand the problem, there can be no restoration of normal world trade until the prices received by the great food producing and raw material producing areas are raised either to the level of the prices now required for the manufactured goods of the industrial areas; or, alternately, until the cost of the manufactured goods has been reduced to the price level received now for primary products. That is the problem. Either we must face a reduction of our prices in order to get the price of our goods down to the level which the food producing and raw material countries are now receiving, or we must devise some method of raising the price of foodstuffs and raw materials to enable the exchange to take place.
I am absolutely opposed to any attempt to reduce wages in this country in order to reduce the price of our goods for sale abroad. I am opposed to that, because it will not provide a remedy for the situation with which we are now faced. The more reductions of wages take place the less demand there will be for goods produced in this country or for the imports from our Dominions and Colonies. The more wages are reduced the greater becomes the burden of the national Debt, local taxation and fixed interest-bearing charges. Such a proposal would not reduce the difficulties created by trade depression and may provoke industrial disorder. This policy will not provide a remedy for the existing state of affairs. I believe that there is a step within the competence of this country which could be taken by the Chancellor of the Exchequer in order to meet, to some extent, the situation which now exists. We all know that the Government are doing their best to promote international agreement and co-operation, but, if we are to wait until the American bankers and the French bankers find themselves in complete sympathy with British interests, we may have to wait some considerable time.
Therefore, the question arises as to whether the British Chancellor of the Exchequer could not take some steps in order to begin this recovery of prices so far as world commodities are concerned. On this point, I commend to the Chancellor of the Exchequer a statement made by a distinguished political economist, Professor Edwin Canaan, who has the reputation of being more frequently right than wrong, a statement which does not apply to all economists. Professor Canaan says:
What is wanted is to throw more gold on the market outside that furnished by the demand of the gold standard countries for central banking hoards. Gold, like other things, is cheapened when less is bought, not, as some banks and politicians seem to imagine, when more is bought.
Great Britain is not at present in a good position for preaching this doctrine. It is true that the hoard is not so great in proportion to all possible requirements as the boards of some other countries, but her principle that all additions to her currency must be met by equal additions to her gold hoard would, if generally adopted, cause the demand for gold to be far greater than the more widely accepted—though also indefensible—rule of 30 per cent. or 40 per cent. cover would require. She could, however, easily escape from this awkward position if the Bank and the Treasury would at once agree upon a moderate increase of the fiduciary issue, and give out that Parliament would be asked to ratify not only this but also further increases as they were required. Such a move would not only enable her to take her proper place in a general movement for checking the inconvenient falling tendency of prices which has been present for some years, but might also he seine considerable help toward putting an end to the violent slump of the last 15 months.
I hope that that step, or some other, will be taken in order to get out of the present debacle and to restart the wheels of trade. I believe that at least 10,000,000 of the unemployed owe the position in which they are placed to the mistakes of the bankers in mishandling the return to the gold standard.

Whereupon, the GENTLEMAN USHER OF THE BLACK ROD, being come with a Message, the CHAIRMAN left the Chair.

Mr. SPEAKER resumed the Chair.

Orders of the Day — ROYAL ASSENT.

Message to attend the Lords Commissioners.

The House went; and, having returned, Mr. SPEAKER reported the Royal Assent to—

1. Army and Air Force (Annual) Act, 1931.
2. Yarmouth Naval Hospital Act, 1931.
3. Public Works Facilities Scheme (Inverness Harbour) Confirmation Act, 1931.
4. London Midland and Scottish Railway Order Confirmation Act, 1931.
5. London Assurance Act, 1931.
6. Birmingham Canal Navigations Act, 1931.
7. Gillingham Corporation Act, 3931.
8. Carnegie Hero Fund Trust Act, 1931.

Orders of the Day — WAYS AND MEANS.

Again considered in Committee.

[Sir ROBERT YOUNG in the Chair.]

Question again proposed,
That it is expedient to amend the Law relating to the National Debt, Customs, and Inland Revenue (including Excise), and to make further provision in connection with Finance."—[Mr. P. Snowden.]

Mr. TAYLOR: We all hope that the expectation of the Chancellor of the Exchequer in regard to a trade revival during the coming year will be realised, and that we shall pass out of a world in which we have the paradox of poverty in the midst of plenty. But, even if the normal volume of trade were restored upon the capitalistic basis, we should still have a situation in which the masses of the people would not be able fully to enjoy all the great things which science and invention are now making available for the use of mankind. It seems to me that it is the capitalist system that is in the dock. Millions of human beings are unable to get the work that they want, and there are millions of human beings with unsatisfied wants, while at the same time we have all that is necessary to meet those wants. I can only say that I hope that before very long the people of this country will see fit to give to a Socialist Government a Socialist majority with a mandate to organise the resources of this nation and to control their use in the interests of the great masses of the people.

Lieut.-Colonel GAULT: I hope that as a country Member I may be permitted to reiterate what has already been said in many quarters of the Committee, and that is how glad we all were to see the Chancellor of the Exchequer here on Monday last, and able to introduce his Budget personally. I should also like to express the hope that during the rest of this Parliament—which many of us sincerely trust, for the sake of the country, will not be long—the right hon. Gentleman will be able to attend without undue fatigue to the duties of the high office to which he is called.
The Budget which the right hon. Gentleman introduced on Monday will, I fear, be a very disappointing Budget to most of us in the House of Commons. The hopes of those Members who sit on the Government benches must indeed be dashed to the ground by what the Chancellor of the Exchequer has said, and I fear that they will have to give up all hope of "Socialism in our Time," which merely means a transference of individual capitalism to State capitalism. I think that this Budget can probably be best described as a beggarly Radical Budget to secure Liberal support and so maintain the Socialist Government in power against what I believe to be the overwhelming wishes of the people at the present time. The price that is paid for this unholy alliance we on the Opposition benches do not, of course, know. As time goes on, doubtless the policy and the arrangements will be outlined to the House, but I fear that they may involve some scheme of large borrowings for expenditure on unproductive enterprises which can only be regarded as mere palliatives for the solution of the unemployment problem with which we are confronted. May I remind the Chancellor of the Exchequer, and the Government as a whole, of one of our old English adages, for in these old English adages we find a good deal of wisdom and common sense. It is that which says:
He that goes a'borrowing goes a' sorrowing.
When vast liabilities are piled up as a result of borrowing, either individually or nationally, those liabilities have to be met at some time or another, and cannot be indefinitely put off. This Budget is a Budget of speculation, the gambler's last chance, and, as my right hon. Friend the Member for Epping (Mr. Churchill)
pointed out in his brilliant speech this afternoon, contains a real gap, which the Chancellor has been unable to bridge, between real revenue and expenditure, of somewhere between £30,000,000 and £40,000,000. The problem of balancing the Budget, therefore, is really being left to the next Government when it comes into power, let us hope within the next few months, even though a General Election may have been postponed as a result of arrangements made between the Government and their Liberal supporters. It will, indeed, be an appalling legacy for the next Government, but, when that Government comes into power, I feel sure that a sounder and saner financial policy for dealing with the great problem of balancing the Budget will be found. In his speech on Monday the Chancellor referred to the policy which is dear to many of us in the House of Commons—a policy for which the country seems to be crying out louder and louder with each succeeding month—and that is the policy which will safeguard the markets of this country for the products of its industries. The Chancellor of the Exchequer, speaking on this subject, said:
A revenue tariff apart from its Protectionist object, is a means of relieving the well-to-do at the expense of the poor and is an indirect method of reducing wages."—[OFFICIAL REPORT, 27th April, 1931; col. 1403, Vol. 251.]
I should like to reply to that statement by two quotations. The first is as follows:
I still believe that there is but one way to extricate the country from the calamities which it now experiences and those which are impending—and that is by the frank adoption of the principle of reciprocity as the fundamental principle of your commercial code; and that such is the only means to be pursued against hostile tariffs and countervailing duties. To tax the community for the advantage of a class is not protection; it is plunder, and I disclaim it. But I ask you to protect the rights and interests of labour generally, in the first place by allowing no free imports from countries which meet you with countervailing duties, and, in the second place, with respect to agricultural produce, to compensate the soil for the burdens from which other classes are free by an equivalent duty. This is my view of what is called 'protection.' I am not an enemy myself to Free Trade according to my idea of Free Trade, but my idea of Free. Trade is this: that you cannot have Free Trade unless the person you deal with is as liberal as your-
self. If I saw a prize-fighter encountering a galley-slave in irons, I should consider the combat equally as fair as to make England fight hostile tariffs with free imports.
That quotation is taken from a speech delivered at Shrewsbury on the 9th May, 1843, by Disraeli, and I am inclined to think that the words that he spoke nearly 90 years ago are as applicable to-day as they were when they were uttered.
I have only one other quotation to give. It is a more modern one, being taken from what was said by Professor Keynes in the Press only last night. Professor Keynes, if I remember aright, is the one who, until recently, has always advocated the policy of Free Trade, or rather, free imports. He now writes:
This Budget marks time. But it also wastes time. Things will not come right by themselves, however much the intensely negative mind of our Chancellor wishes they would. Nothing has occurred in recent months—quite the contrary—to modify my belief that a tariff is a necessary ingredient in any constructive policy, and that events will force us in this direction whether we like it or not. But a constructive policy, alas! is far from our Chancellor's heart.
6.0 p.m.
May I turn to the three sources from which the Chancellor is balancing his Budget? The first is the raiding of the Exchange Account. This, as I understand it, is nothing more nor less than a suspense account for capital, so that he is guilty of drawing upon capital resources—as a financial expediency I agree—in order to obtain this amount of the deficit, with which he is faced. The hon. Member for East Leicester (Mr. Wise) yesterday drew the deduction of the country being prosperous as represented by the savings bank balances. I cannot imagine a more erroneous deduction for, when the country is confronted with a glut of money, as she is at present, it simply means that money is cheap, and cheap money invariably means the stagnation of industry which is the real source of wealth of our people. Were I in the Chancellor's place, I should aim at two things: First, the emergency Budget, which the right hon. Gentleman the Member for Edgbaston (Mr. Chamberlain) advanced yesterday. Secondly, I should like to see an international Currency Commission created for the purpose of investigating the whole of the monetary
systems of the world, for there appears to he no doubt that the United States and France between them holding something like 60 per cent. of the gold and refusing to take payment of debts by goods has dislocated to a very large extent the free flow of international trade.
The second item from which the right hon. Gentleman proposes to take £10,000,000 is the anticipation of the Revenue. That also introduces a principle which cannot for a moment be admitted to be sound, for, if we reduce it to a complete absurdity, we come to perhaps drawing upon our income of 50 years hence and applying it to our expenditure of the present day. Long before we could find the revenue to be obtained in 50 years from now I am afraid the State would indeed have become bankrupt. The right hon. Gentleman the Member for West Birmingham (Sir A. Chamberlain), when Chancellor of the Exchequer shortly after the War, when he was confronted with far greater difficulties than the Chancellor is at present, laid it down that we must pay our way from year to year, and I sincerely trust that that principle will very soon come into force again.
With regard to land values, I hold no brief for anything in the nature of exploitation, but we all remember the failure of the last Land Taxes, which resulted in costing the country considerably more than the actual amount derived from the taxation itself. Nothing, of course, could be more foolish than to put into operation any legislation of this sort. If a Land Tax is to be put into effect, I trust that the Government will exclude agricultural land, because agriculture is, perhaps, the most depressed industry in the country to-day, and anything in the nature of increased taxation will make it more and more difficult for those who depend upon the land to derive an existence at all, more especially at present when the Government aims at getting more people back on to the land in smallholdings.
Another point I should like to touch upon is the question of the collectors of Income Tax, whom the Chancellor proposes to place under the Inland Revenue Department. They have always been regarded by the taxpayers as a real buffer between themselves and the Inland
Revenue Department, and, if they are placed under the Inland Revenue Department, one of the safest buffers that the taxpayer has will be removed, and, consequently, he will not have the confidence which he has to-day that his position will be safeguarded by that type of official. It is true that heretofore they have not, perhaps, been adequately paid, but this is a matter that could be readily overcome by paying a more adequate remuneration. I understand that a great many of them do not wish to be placed under the Inland Revenue Department, and I trust that the Chancellor will bear this in mind and will not put this provision into effect.

Mr. GRAHAM WHITE: The hon. and gallant Gentleman who has just spoken gave us a long quotation from Mr. Disraeli which is entitled to our respect, not only because it falls from that statesman but also on account of its antiquity. I have made it a rule not to indulge in that form of retaliation which consists in quoting my opponents' speeches. I have never found that that contributes to the solution of any business that happens to be in hand. But the hon. and gallant Gentleman rather tempts me to reply with a quotation that is somewhat more up to date. It is only a year or two ago and it is from the right hon. Gentleman the Member for Epping (Mr. Churchill), who said, on the subject of retaliation by means of tariffs, that it was not a question of ancient theory but a matter of ascertained fact that there is no country in the world to-day that obtains better terms of entry for its goods into any other market than this country of England. I believe that is true to-day. At any rate, I have never heard anyone inside or outside the House question the veracity of the statement.
I listened to-day, as I always do, with the very greatest pleasure and entertainment to the speech of the right hon. Gentleman the Member for Epping, and I found myself in a far greater measure of agreement with the latter part of his speech than I generally do, and, in particular, with those few sentences in which he urged upon the country the necessity of not allowing the time that has to elapse between now and the next Budget to be passed in idleness and without making preparations to try to set our house in order. This Budget has been received
with feelings of relief tempered by very great apprehension. If the country is to take it as an opiate to send us to sleep for the next 12 months, the most pessimistic feeling that has been expressed in the House or outside it may very well be realised. It is not to be denied that this Budget is in a very considerable measure a gamble upon the return of prosperity.
It is, unfortunately, the case that prosperity is conditioned by many factors of an international character which are quite beyond our control. There are, however, some conditions which we can seek to control, and it is on one or two aspects of that question that I should like to make a few remarks. Attention has been drawn to the subject of international debts. It is true that international debts rank with the spirit of economic nationalism, which rages so much in Europe, expressing itself in tariff barriers and trade obstacles, as being a very formidable, if not the most formidable, obstacle in the way of trade recovery. The key to the solution of international debt—a subject which I hope will be faced sooner or later—is to be found in the United States. There, there is a division of opinion on the subject. It is true that there is probably a greater measure of feeling in favour of some re-opening of that question to-day than there has been in the past, but there is also a very strong, indeed an overriding, opinion against re-opening the question of the Debt so long as Europe continues to squander so much of her substance on armaments. The argument—and if I were an American I should feel very great sympathy with it—is that if Europe can afford to spend £520,000,000 a year on armaments, she may just as well spend it on paying the interest of our Debt. That is a clear call to everyone in the country to do everything possible to promote a proper atmosphere which will permit a successful result of the Disarmament Conference in February next. If we can do that, it will be the first stage towards a solution of one of the most awkward financial problems that we have to face.
To fill the gaps in the Budget, the Chancellor has had to rely on the hope that there may be some substantial results in the way of economy during the next 12 months. He has also laid stress on the fact that he hopes to obtain some
relief from the conversion of our Debt at the proper time. I wonder whether it is fully realised that it is almost impossible to look forward to any conversion of our Debt within a reasonable time unless it is linked with this question of economy. We all remember the means that were adopted to float the 5 per cent. War Loan. We know how the aid of every financial agency, great and small, was invoked in the effort. We also realise that the existence of that great block of 5 per cent. War Loan is a drag upon the gilt-edged market. It has raised, according to one competent authority, the price of all borrowings in recent years by the Government, by municipalities, or by any of those who are able to borrow within the range of first-class security by at least ½ per cent. It must obviously be the desire of the Chancellor to convert that Debt at the earliest possible moment. I hope that at the appropriate time he will call upon the whole country to assist him to get rid of the debt. No attempt can be made with any prospect of success unless, as a preliminary condition, the whole country is satisfied that every national transaction has been reviewed and that it is quite clear there will be no money spent upon unproductive purposes which can be avoided, and that everything which can be described as an abuse in our unemployment insurance scheme has been removed. That is an essential preliminary. If the Chancellor of the Exchequer is enabled to do that, he will be entitled to go to those who have previously helped to raise that money and say, "I look to you for no less an effort to try to convert it on a basis which will help to relieve this country in time of emergency of a very serious burden."
There is another aspect in regard to which we can help ourselves, and which is in no way dependent upon a tariff. I do not think, if one reviews the trade statistics of this country, that there is really any ground for extreme pessimism, if we are prepared to help ourselves. If one compares, even in these black days, the volume of production in this country with that of other countries, there is no ground for pessimism. In 1930 as compared with the previous year, for example, the volume of production in this country fell by 8 per cent., in Ger-
many by 16 per cent., in Canada by 14 per cent., and in the United States of America by a somewhat similar figure. When I look at these figures, and when, in conjunction with them, I read the reports published from time to time of the trade missions which have gone overseas at the initiation of the Overseas Trade Department, I am not surprised at the decline in our export trade, but I am surprised that we do as well as we do. It does not matter which of those reports one takes up, whether it is the D'Abernon Report with regard to our business with South America, or whether it is the report of Sir Arthur Balfour's Mission which went to Egypt, they all tell the same story. The same feature occurs in every one of them, although there are some notable and distinguished exceptions, and those exceptions are the people who, in spite of the present hard times, are enjoying a fair measure of prosperity. The attitude of the English exporter and the English manufacturer towards his customers overseas is still "Take it or leave it."
For the last 50 years, or up to, perhaps, the beginning of this century, we led the world in the matter of trade and export business. Our competitors overseas had to learn from us. We must admit now, on the irrefutable evidence of those most competent trade missions which have been overseas, that in the matter of salesmanship and of understanding the overseas business, we have something to learn from our competitors. If we do not set ourselves to learn the lesson speedily, our export trade, in spite of any adventitious aid or anything we can do, will continue to depart. When one hears of the efforts which are made to sell our goods in competition with other countries, he cannot be surprised that our efforts fail. In Rhodesia, where we had a sympathetic market if not an absolute monopoly, we find business being done by Germany and by other foreigners. In Northern Europe, in Holland, Denmark, Sweden and so on, where there is a natural preference for dealing in British goods and where people would be prepared to buy them, not only at equal prices but even at slightly increased prices, it is clear that our manufacturers and exporters are either ignorant of the fact that such a preference exists and of the opportunity which exists there for the cultivation of
British trade, or they have neglected altogether to avail themselves of those opportunities. It is to be hoped that they will act promptly, and at once, upon the recommendations of the valuable missions which have been overseas. The work of the Overseas Trade Department is as valuable a contribution to the solution of the unemployment problem in this country as the contribution of any other Government Department working on the problem at the present time, and it is a little disconcerting to find that when they ask for money for the purpose of investigations overseas, they are unable to obtain it. I hope that in the future the Government will give more sympathy to the very excellent work which is being done by that Department.
The right hon. Gentleman the Member for Edgbaston (Mr. Chamberlain), again supported in this respect by the right hon. Gentleman the Member for Epping, has expressed the view that the present Budget was the last Free Trade Budget which would be introduced in this country. I cannot help wondering what would have been the state of the finances of this country if in the past we had relied upon a tariff for our revenue. We know what has happened in the United States of America. They rely very largely for their revenue upon their tariff system. They have in America to-day two recipes for prosperity upon which they had always relied in the past and which had never failed them previously—a Republican Government and a large increase in tariffs. These two blessings in the United States have coincided with the biggest slump in their industrial history. Bad as are things in this country, it is true to say that only a little more than 50 per cent. of the industrial population of the United States of America are to-day working full time. We heard yesterday that they were anticipating a deficit this year in their national accounts of £160,000,000 and an increase in their gross debt of £60,000,000. That is an irresistible argument against any change in our fiscal system. Wherever one looks one sees that there is no conclusive argument to be derived for our adopting a system of that kind.
It will greatly facilitate discussion on this subject if we know exactly what it is that is proposed. The programme has been changed so frequently, that even the
right hon. Gentleman the Member for Epping, with his great mental activity, has expressed himself as being unable to keep pace with it. It is now described as the policy of the "free hand." There may be, perhaps, someone in this country to whom people would be willing to give a free hand to manage their industrial affairs and fiscal policy. I do not know if there is such a man. But the country should think twice, and if it thinks twice, it will certainly refuse to give a free hand with regard to fiscal policy in this country to that statesman to whom it gave a free hand once before, and who went to America and, with that free hand, made a free agreement which has saddled this country with an Income Tax equivalent to 11d. in the £ for the lifetime of the present generation.

Sir HILTON YOUNG: There were two parts in the argument of the hon. Gentleman the Member for East Birkenhead (Mr. White) with which I fail to sympathise. The first was that in which he attributed the decay of our export trade to defects in the energy and enterprise of our manufacturers and industrialists. When you subject a class to taxation heavier than that of similar classes of any other nation, when you impose upon them the burden of maintaining a standard of living higher than that of any other nation without the protection of tariffs, it is neither common sense nor generous to blame them for the difficulties in which they find themselves. There is another point in regard to which, I confess, he fails to carry me with him. It was when he repeated the old, baseless misrepresentation that the bargain made upon our part by the right hon. Gentleman the Member for Bewdley (Mr. S. Baldwin) was not a good bargain. By means of that bargain, our annual liability to the United States of America was reduced, if my memory serves me, from £60,000,000 to £30,000,000 a year. That at the time seemed a good bargain, and it is foolish wisdom after the event—it is most ungenerous and false criticism—to attempt to turn back the clock of time and visit him with criticisms which are undeserved.
I have only one reference to make to the speech of the right hon. Gentleman the Member for Darwen (Sir H. Samuel), and that is a note of most unqualified admiration of the extraordinary
dexterity with which use is made of the device of a fictitious opposition in order to have two Government speeches for each one of the Opposition. I have heard some wonder expressed lately, now that a compact has been signed, sealed and delivered on the part of the Government and the Liberal Opposition, that any trouble should be taken to maintain any formal distinction, but as long as it is so much to the advantage of both parties not to do so, in order to confuse the Opposition forces, it is no wonder that the distinction is maintained. The right hon. Gentleman, most ably as ever, discharged the characteristic functions of an auxiliary in battle. First of all, under a cloud of dust, on the extreme flank, he made a sham attack upon the Government, in order to confuse the issue. He then proceeded to carry out the true function assigned to him and that was to try to raise a false issue by a vigorous attack upon the flank of the Opposition on tariffs. We decline that issue to-day. [An HON. MEMBER: "Hear, hear!"] Issues are raised for our discussion to-day—and let me say to the hon. Member who has just cheered, that this is about the only day in the year we get to discuss those issues—of such gravity and moment that they deserve all the time we can give to them. The right hon. Gentleman the Member for Epping (Mr. Churchill)—his absence at the moment is due to an unavoidable cause—with characteristic vigour ranged himself on the side of the Chancellor of the Exchequer, and, indeed, claimed him as a follower in regard to some of those points of the Budget which seem to us on these benches to be most open to criticism. If the right hon. Member for Epping does so, he of course gets into the line of fire of criticism upon those points of policy in the Budget, and undoubtedly he will be the very last to complain if some of the criticism reaches him.
It is a pleasant thing to find a good point in the Budget, having regard to the hard labour that is involved in its preparation, in order to relieve the monotony of criticism. It is entirely to the good that we should be rid, once and for all, of the pretence of keeping the litter of old deficits unburied. One small voice was raised last year to criticise that policy when it was introduced by
the Chancellor of the Exchequer with such a great flourish of trumpets. It was then said that it could serve no useful purpose to confuse the accounts of future years by the pretence of carrying forward an obligation in respect of these old deficits, and I am glad the Chancellor of the Exchequer has been converted to that point of view. One always suspected that he was anxious to keep the deficit in the public eye because it was his predecessor's deficit. Now that the deficit is his own, he is not so reluctant to bury it.
I really value this occasion for its having produced in the speech of the Chancellor of the Exchequer one of the most brilliant gems of, if I may call it so—I am bound to use the words—Snowdenian finance, that has yet been given to us, in all his brilliant speeches. He said:
The first £5,000,000 of the 1929 deficit was duly provided for. That sum has been included in …. last year's deficit."—[OFFICIAL REPORT, 27th April, 1931; cols. 1396–7, Vol. 251.]
This is a point of minor importance in the Budget, but it is of interest as showing the general methods of the Chancellor of the Exchequer's finance. His mentality is that of one of the great preachers of financial incorrectitude, the great Mr. Micawber, who derived the same satisfaction from signing an I.O.U. as he did from settling a debt. It would be a satisfaction to all of us could we provide for last week's butcher's bill by including it in this week's butcher's bill, leaving both unpaid.
Let me call attention to another characteristic of the Budget. I suppose there has been no general principle which has so much tended to the building of our finances upon a sound basis and to making them, as they have been, and indeed still are, an example to the world, than the fact that the British Budget has ever been not a fancy, not an hypothesis. It has ever been hitherto an actual fact. It is a programme which is to be carried out in fact during the year. Certainty in the Budget is what has made British finance a model for the world. That has meant adopting a scheme for the Budget which you know that you can carry out. This year, and I think for the first time, that can no longer be our boast. This Budget is not a certainty; it is not a programme which the Chancellor of the Exchequer knows
he can carry out. It is a thing of hopes and guesses, and nothing more.
Let me invite the attention of the Financial Secreary of the Treasury to both sides of the account. Let me invite his attention first to the expenditure side. What does the Chancellor of the Exchequer rely on there? On the hope of economy. First of all, he relies on the work of the Economy Committee. Criticisms have sharply and justly been made upon the Government for the feeble devolution of authority in this respect to a committee. I am not one who builds very great hopes upon the labours of that committee, despite the great ability and industry which its members bring to bear upon their task. The economy for which the Chancellor of the Exchequer looks must be economy in great matters of policy. How can any committee face up to that? The Socialist Government dare not face up to it themselves. Do they expect a committee to have more courage than they have themselves? It is indeed likely enough that the committee will have more courage than the Government. They may have more courage, but in matters of policy they have not the power. So much for economy in that direction.
Then there is the Chancellor's hope that the Government may economise on their own initiative. What are the hopes there? Economy is not a matter of professions. To be effective, economy must be a habit, a principle, and a faith. In order to economise you must seek economy and ensue it. Much to be deprecated is the habit into which this Government has fallen of trying to run with the hare and hunt with the hounds. The Chancellor of the Exchequer comes here and makes the most eloquent and correct speeches, with which he dopes the country, about his passion for economy. Then he goes away and the spending Minister comes along for the money which is to be used for vote-catching. This Box and Cox method is not creditable. It deprives us of any confidence whatever in the Government being able to effect economy of their own initiative.
Next, there is the question of Supplementary Estimates. There is no provision in the Budget for them. Again, in this the Budget is a matter of hopes and aspirations. If there is anything certain in the world, it is that there will be Sup-
plementary Estimates this year, and it may be as big as last year. The whole of the Estimate side of the Budget is contingency, and it is the same on the revenue side. I will not repeat the arguments which were so ably developed by the hon. Member for Westmorland (Mr. O. Stanley), in which he criticised the solidity of the Chancellor's Estimates of revenue. I can only say that they have surprised instructed public opinion, and there is some doubt of his ability to fulfil those Estimates. There is only one source of revenue in connection with the Estimates to which the Chancellor of the Exchequer feels absolutely confident, and that is the Sur-tax. He is absolutely confident that he will get the amount for which he estimates there, which is a little increase on last year. Why has he that confidence? Because he tells us it is the one source of income which is not affected by the depression of the times. The only reason why he can depend on this particular revenue is because it is based on a so-called statutory income and so bears no relation to the true income of the country. It is independent of the depressed state of trade. What a point upon which to pride oneself in a financial scheme! Practically his whole estimate of income is contingent.
The last element of doubt in the financial situation is the financing of unemployment insurance. I venture to say that that is the most important single factor in the Budget, and I say, too, that whether the Chancellor of the Exchequer realises it or not, he has given absolutely no idea of what the valuation of that factor is going to be in this year's finances. He has omitted from the Budget scheme, by a polite and dangerous fiction, any full account of this, the greatest, and, at the present time, the most dubious burden that we have to bear. I would make two appeals to the Ministers of the Treasury. The first is this. Owing to the modern growth of unemployment finance, owing to the fact that the forms of our Budget and our accounts are not adapted to this novelty, they do not give the House and the country a true picture of national finance. Therefore, I appeal to the Treasury Ministers that, in their own interest and in the interest of the education of the country, in order to give a true account of the state of our finances,
they should publish a public paper in addition to the Budget giving the true state of unemployment finance, and showing the actual ascertained liabilities and the contingent liabilities in that respect. The hon. and gallant Member for Kelvingrove (Major Elliot) made a criticism of the figures of unemployment insurance finance which, if they are justified—and we believe them to be justified from so well-informed a source—make it futile to criticise the Budget in its present form as a full account of national liabilities. His criticism was that adeqate provision has not been made for transitional benefit. My first appeal is for a supplementary Budget, to show what liabilities we have to meet under this heading.
My second appeal is this. I think that enough has been said, if not by myself by other speakers, to show that the Budget has lost the certainty which was the foundation-stone of good finance in the country. It has become a matter of hopes and guesses, of contingency and gamble. The old practice by which the general control of our finances was allowed to go on uncontrolled by us over the whole 12 months between Budget and Budget is not suitable to the present state of our financial affairs. I would ask the Chancellor of the Exchequer, since his Budget is all contingency, to come back sooner to the House with a statement, so that when the House meets in the autumn he can tell us how the contingencies have been realised—in order that the House and the country may brace themselves for any necessary restriction of expenditure which may be forced upon us by the way things are turning out.
I have said, and I will justify the criticism a little further, that this Budget does not show to the country the true state of our financial affairs. As my lawful avocations have taken me about the world, I have had an opportunity of learning some of the characteristics of the evils which beset nations in financial difficulties. I have learned what the historical facts are and the manner by which countries get into difficulties. I have learned some of the symptoms of a nation in financial difficulties. I have noticed that the descent into financial difficulties always follows
a certain course. It begins with overspending, and that overspending, according to my observation, has very often been based upon schemes, which in this country we think of as Socialist schemes, which set out to maintain a standard of living regardless of the revenue of the country as it varies in good and bad times, and which seek to produce a distribution of wealth which is greater than can be endured by the existing organisation of industry. That overspending, according to observations which seem to me to be true, is followed by attempts to meet current expenditure in other ways than out of current revenue, and I always have found that two expedients are adopted, first of all the expedient of the anticipation of revenue, and secondly the expedient of confusion between revenue and capital accounts.
I observe both these features in this year's Budget. The next stage, when every other expedient has been used and critics and the public begin to find out what the Government has been doing, finds the Government beginning frankly to borrow in order to maintain the expenditure that is forced upon it by its extravagant followers. It does that until its credit is exhausted and it can borrow no more. When it can borrow no more it resorts to the expedient of inflation and the degradation of its currency. After that, there comes unemployment for the wage-earner and ruin to the middle classes and, finally, want and civil strife, and the matter ends by someone being hung up on a lamp-post. I have observed the beginnings of these symptoms in this Budget. There is anticipation of revenue. There is confusion between capital and revenue account. Now, certainly, I do not want to see the Chancellor of the Exchequer hanging from a lamp-post: I should deeply regret it on Personal grounds although there would be political compensations. But, unfortunately, the Chancellor of the Exchequer is producing an impossible position for those who will have to follow him, and I should regret it even more if any right hon. Friends of mine on the Front Opposition Bench were to grace the halter.
It is not without a sense of grave responsibility that I call the attention of the Committee to the fact that we have in this Budget these first two fatal
symptoms of a descent into national unsoundness. With regard to anticipation of revenue, let me refer to the device in the Budget by which the Chancellor of the Exchequer is going to raise £10,000,000 by the anticipation of Income Tax. Can we not strip away all pretence, all the petticoats which are hung around this, in order to pretend that it is not an increase of taxation? Ten million pounds more of public money is to be got by the Chancellor of the Exchequer this year; and it does not come from nowhere. It is, of course, a fresh burden of direct taxation.
What astonished me in this proposal, or rather in the attempt of the Chancellor of the Exchequer to camouflage the proposal, is that he has actually succeeded in taking in the right hon. Member for Epping, upon which I congratulate him, because it is not easily done. One of the most eloquent passages in the speech of the right hon. Member for Epping was when he congratulated the Chancellor of the Exchequer for having recognised that there could be no increase of direct taxation. There is an increase of direct taxation, equivalent to a general additional 2d. on the Income Tax for this year, and in the cases actually affected equal to an additional 1s. 1½d. in the £. The Chancellor of the Exchequer has made loud professions in this House of his intention to place no further burdens on productive industry. In view of this new burden on productive work, those professions are worth no more than his plea for economy. He is doing nothing to make good his professions; the only thing which distinguishes this proposal from any ordinary increase of direct taxation is that it is for a year only and cannot be repeated. That has an advantage from the point of view of the actual taxpayer, but it has a grave disadvantage from the point of view of the education of this country as to the true present financial situation.
One would not speak on this subject without referring to a constructive alternative. There is one. It is a tariff, which whilst not having revenue as its first object, would nevertheless produce revenue. The Chancellor of the Exchequer tells us that he will never be a party to such a proceeding, and he seems to think that that finishes it. It would finish it if he were Chancellor of the Ex-
chequer by the grace of God, but he is only Chancellor of the Exchequer by the grace of the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), and that is a much more uncertain tenure. Although the Chancellor of the Exchequer will never be a party to a tariff, the strange thing is that there will be a tariff, because if there is anything upon which the country has obviously made up its mind it is upon the question of a tariff. The Chancellor of the Exchequer, in an eloquent passage, told us that tariffs should be opposed because they are Excise Duties upon articles needed for home industry, because they involve such Excise Duties, indirectly.
Let me ask him: What is his tax on land? Is not that a duty upon an article which is the necessary raw material for all industries? Is he going to make production easier, is he going to assist the standard of living, by increasing the trouble and expense of ownership of this raw material of industry and housing? No. There is a constructive programme which the country awaits. I have said that in the present course of our national finances we are showing the symptoms of the first two dangerous steps towards financial unsoundness. I will not emphasise the first aspect of over-spending because that has been dealt with adequately in other speeches, but it has to be remembered on such occasions as this that the real condemnation of the Government's policy is not in any particular measure it takes in order to meet the additional expenditure of the next year but in the fact that any such additional expenditure is necessary at all in such a year as this. This Government will stand condemned, when the history of its financial policy is reviewed, not so much on account of its measures for providing taxation, because bad as they are there has been no great opportunity of going too far astray, as because at a time when the industries of the country were falling into a state of greater and greater depression, when the country was definitely getting poorer and not richer, it has been utterly blind to the true state of the nation and has been piling on expenditure which the nation could not afford.
The conclusions I draw, looking at the Budget of this year in the light of these criticisms, I may express in a single
sentence which, if it be true, should cast upon this Committee a burden of responsibility and an obligation for action greater than any which has been cast upon it in regard to any political issue in my time. It is this. This Budget does not balance. For the first time in modern history we are presented by the Chancellor of the Exchequer with a Budget which does not make both ends meet. When I say that, I do not refer to any formal deficiency in the Sinking Fund account, or to the fact that we shall not be able to live up to our Sinking Fund policy. Apart from that, if you cleave through the obscurities which are imposed upon us by our Budget system and by our accounting system and look at the facts you will see, not as a possibility but as a certainty, that at the end of the year we shall not have met current expenditure out of current revenue. That is clear; it is the fact; and nobody who troubles to understand the Budget can doubt it. In one passage of his speech the Chancellor of the Exchequer sought to escape by the plea that this was only to meet a temporary emergency. It is not a matter of a temporary emergency. Unless some great effort is made in economising on public services the expenditure upon our shoulders this year will be permanent expenditure. It should be met, by every principle of common sense and sound finance, by permanent revenue. It is not so met. That being so, the Budget does not balance.
The Chancellor of the Exchequer allows for a formal sinking fund of £52,050,000. What is there to set against that? Let us agree and admit that if there be any surplus at all, however small, for the redemption of debt, that leaves you an actually balanced Budget. But that will not be so this year. Against the apparent £52,000,000 for Sinking Fund we have the overwhelming burden of the borrowing on the Unemployment Insurance Fund. That is £1,000,000 per week; at least that is our present information. If that be so, then there is £52,000,000 that must at once be set against the apparent Sinking Fund. I beg the Committee not to be deluded into the belief that you are reducing your Debt if you have a Sinking Fund of £52,000,000 and are borrowing £52,000,000 at the same time. No useful purpose
whatever is served by having a Sinking Fund of £52,000,000 if you are borrowing £52,000,000. You are serving a useless and mischievous purpose, because you are deceiving yourself as to the true state of your finances.
But it is not only this £52,000,000 which must be set against the apparent sinking fund; there is also the £20,000,000 from the Exchange Fund. There is no doubt that this sum came from capital account and should go back to capital account. Is there £20,000,000 worth in dollars in the banks in the United States which can be brought to the assistance of the Chancellor of the Exchequer in his difficulty? I take it that to the extent to which this £20,000,000 is brought to the assistance of the Chancellor of the Exchequer for revenue the floating Debt of the country will be enlarged. Further, there are the probable Supplementary Estimates, and the possibility of a failure in the estimate of revenue. In these conditions it is apparent that the £52,000,000 Sinking Fund is more than offset. The Budget shows in fact a deficiency. It is a Budget which does not balance. In deed, it shows already a deficiency of at least £20,000,000. Words fail a speaker to express the gravity of that situation. What is even more grave is that the people are not realising it, and that the Government gets away behind a smoke screen which is preventing the country from seeing its real financial position.
At the present time what this country needs most of all is a clear sight as to the true state of its national finances. A great effort is necessary, great sacrifices may be necessary, and the country is capable of making them, but only if it knows the true state of affairs. The right hon. Member for Edgbaston referred yesterday to the relief which the Budget has produced. It is true that there is a feeling of relief, and I look upon it as one of the gravest things that has happened in this country in regard to its finances. It is the sort of relief which comes to a drunken man who wakes up with a bad headache in the morning and finds his faithful servant awaiting him with another drink. It will set his nerves at rest, but it will not improve his general condition. That can only be done by careful dieting and total abstinence; a total abstinence from these financial expedients which drug the country into thinking
that it is capable of spending more than it has got. At the present moment we are in a position of great gravity, but it is not one of despair. It is the position of a man who has begun a climb down a cliff and finds at each point another little tuft of grass or gnarled root to which he can hang on. He climbs lower and lower without realising that he is steadily getting into a more dangerous position. Then he suddenly realises that he is in a position of grave danger from which he can only be rescued by desperate exertions on his part.
7.0 p.m.
Such is our state at the present time. From precarious tuft to tuft, we are lowering ourselves down. If we do not pull ourselves up, we shall suddenly find that we are in a position of grave danger. The country should be told that it cannot afford to go on increasing expenditure in the present state of its finances. It should be told that such Budgets as the present are unsound, because they do not allow for the covering of current expenditure out of current revenue. If you tell the people the true state of affairs, there is nothing to fear. Nobody need fear the people of this country when they are properly informed. How clearly we proved that in the War! Hon. Members opposite used to criticise the Government of the day for not telling the people the truth, and say that if the Government would only tell the people the truth about the War, how much better the country would brace itself to meet the situation. That is just the situation now. The Government is not telling the country the truth about the financial situation, and if it does not tell the people the truth it will have need to fear. No man need fear the people if it is fully informed of what is needed of it. There is much cause to fear the people if it is left in the dark. There is cause to fear for the nation from its uninstructed action. There is cause to fear the penalty it may exact from those who have deluded it.

Mr. PRICE: The hon. Member has criticised Snowdenian finance. In my view the Chancellor has done well in his present Budget in not being so exceedingly orthodox as he appeared to be this time last year, having regard to the situation in which the country finds itself. At a time of trade prosperity it is legi-
timate and desirable to use every effort to pay off the National Debt. A time like this, when there is not only trade depression but monetary deflation, and when world prices have been falling and are still, apparently, going on falling, is not a time to assist the tendency of deflation still further by paying off the debt at the same rate as formerly, but to relax somewhat in that effort, if only for the purpose of trying to keep prices steady. That seems to me to be a wise movement and one to which this Committee has no reason to object.
The Chancellor's speech on Monday was permeated by a certain measure of optimism. I am sure the Committee wishes to reflect, as far as it can on all sides, that optimism; at the same time, there are many hon. Members, and certainly there are some on these benches, who would have liked to have heard from him some reasons for the optimism, and for his hope that fins year would see the turning of the tide and the lifting of the veil of world industrial depression. I realise, as we all do, that the Chancellor's desire was to raise the spirits of the country and not to make it evident that, in his opinion, there was no chance in the immediate future of the lifting of the industrial depression. In spite of that, I think there are many of us who feel that there are reasons why there might be an improvement in the situation, provided certain things were done. I am not altogether satisfied that the Chancellor is in a position to do those things. There was a person listening in the Gallery to his speech last Monday who, I venture to say, has had as much influence and power as has the Chancellor, and as much opportunity, in assisting towards the industrial recovery of this country, and, indeed, of all Europe and, possibly, of the world. I refer to the Governor of the Bank of England. It is the policy of the Bank of England, together with that of the Chancellor, which alone can give us the grounds for the optimism which the Chancellor expressed last Monday. We all know that the Governor of the Bank of England has been in America not very long ago, and that rumour would have it that his visit was in connection with the question of international credit.
There is no chance of the world crisis lifting, unless some measures are taken
to extend credit in such a way as to increase the purchasing power of the undeveloped or colonial areas of the earth. Australia is unable to pay her debts because of the catastrophic fall in wholesale prices, and in the South American Republics revolutions are breaking out periodically. These are only a political reflex of the grave situation brought about by the fall in the wholesale price of food and raw materials, and, in consequence of that, the purchasing power of those countries is cut down and they are unable to buy our manufactured goods. Thus our revenue falls, owing to trade depression. There is a very close connection between the problem of the Chancellor of the Exchequer in raising revenue for the coming year, and the purchasing power of those countries which are now in financial difficulties owing to a fall in wholesale prices. There is a still closer connection between the level of wholesale prices, and the revenue which the Treasury will receive in the course of this year.
I have a strong suspicion that the Bank of England is not as helpful to the Chancellor as it might have been in this matter. There has been a tendency for some months past, if you look at the returns published in the "Economist" and other financial papers, to sell Government securities which the Bank of England holds, and thereby to decrease the deposits which the public and the trading community have at the banks. I see that the Government securities held by the Bank of England on 22nd April totalled £5,000,000 less than the total a week before. It is not very helpful to the general situation of the country, if that course is being followed. It may be that there is a change coming, and the fact that we have heard a certain amount of talk about the possibility of international credits to assist the undeveloped countries like Australia and the South American Republics, makes one hope that there is some greater consciousness of the existence of this problem. If that is so, all I can say is that we are glad.
I will come to another point. The Chancellor has, I am sure, caused relief to many people who were afraid of an increase in direct taxation. Certainly, as far as Income Tax is concerned, there is a great deal to be said in a year like this
for not raising the Income Tax, which falls, as one might say, upon the just and the unjust. I am not one of those who join the Jeremiahs opposite who take the view that industry in this country is on its last legs. Analysis of the figures of industrial profits, published by the "Economist" on 11th April, shows that there are quite a number of industries that are doing very well. I refer to brewers, whose net profits increased last year by.7 per cent.; electric light by 7.5 per cent.; gas by 3.7 per cent.; tramways by 10 per cent.; trust companies by 2 per cent.; and miscellaneous by 1.8 per cent.—a total increased profits amounting to £750,000. I admit that there are largely decreased profits, particularly in iron and steel, coal, shipping, rubber, textiles and tea, which amount to not less than £8,000,000. But an Income Tax would fall equally upon these industries which are struggling with the necessity for reconstruction and rationalisation, as upon the luxury industries which are still doing well in spite of depression.
Moreover, there is that very large class of person generally known as the bondholders, holders of gilt-edged securities, who have profited very much by the general deflation in prices that has gone on in the last 10 years. It is time that the Chancellor explored the possibilities of making this class of person contribute more than it has in recent years. For this purpose, the income Tax and the Super-tax are not, to my mind, an altogether useful weapon or one which is likely to discriminate between those who are well able to bear the burden and those who are not well able to bear it owing to industrial depression. What is needed is an examination of the possibilities of linking the rate of interest on fixed-interest bearing securities, with the level of wholesale prices. I understand that it is being done by some public companies in America who issue debentures on a fixed-interest-bearing basis, and the rate of interest varies with the level of the wholesale prices. I do not know whether it is possible to think out a means of doing this, but I certainly believe that there is a very large source of revenue possible by that means. In any case, it is one in which I do not see how the Income Tax and the Super-tax can very well be used.

Mr. ARTHUR MICHAEL SAMUEL: Did I understand the hon. Member to
say that the receipts of Income Tax for the last two years have gone up, or gone down? I understood him to say that Income Tax earnings under Schedule D were larger than before. As a matter of fact, from 1929 to 1930 they had fallen from £1,064,000,000 to £1,060,000,000.

Mr. PRICE: I was not quoting Income Tax figures, but the figures of industrial profits of certain companies, as they were given in the "Economist," and I was showing that certain industries were doing very well, and that last year they increased their profits. I admit that others have decreased. I was not quoting the whole returns of Income Tax. I wish now to come to another point. The optimism of the Chancellor of the Exchequer, which we should all like to share, of course depends very much on the possibility of bringing in revenue in the coming year, and that will not be possible unless there is a big push towards reconstruction and rationalisation in this country. The reason why the figures I have quoted for certain industrial companies are so poor—in textiles, iron and steel, coal, shipping and so forth, and particularly iron and steel—is that there has not been that reconstruction. Therefore there is a very close connection between the prospects of the financial year for the Treasury and the industrial reconstruction which the Government will have to push on if the optimism of the Chancellor is to be realised. In this connection capital will be required, and with the present political situation we still have to rely upon the private investor and the City of London to supply that capital. I do not think that the evidence shows that the City or some of the investing public are particularly anxious to develop or are interested in developing the natural resources of this country. If the wider public were appealed to, I believe that the appeal would be answered, but the fate of the issue of the Lancashire Cotton Corporation the other day, when 90 per cent. remained in the underwriters' hands, indicates that there is some obstruction which is quite unwarranted.

Mr. BRACKEN: Does the hon. Member realise that the people who hold stock in that Corporation are the people in the City to whom he so greatly objects, and that it is the British public who will not touch the issue, not the City?

Mr. PRICE: I am quite aware of that. I said that there are some, not all, who are not doing their best to push it. Others are no doubt doing their best. I am also aware of the fact that, since this Government came into office, there have been attempts made, sometimes successfully, to send gold and capital over to France. I have here a recent issue of the "Economist," which contains figures of interest. In 1929 the amount of gold in the Bank of England was £160,000,000. The very moment the Chancellor of the Exchequer took office the amount began to go down, until in September of that year it reached £130,000,000–230,000,000 sent to America and France. I am prepared to admit that some of that gold may have gone to the United States owing to the boom there. But in the autumn of that year came the crash in the United States, and some of the money came back, until the right hon. Gentleman introduced his Budget. In April, 1930, down it went again. When the Chancellor quite rightly and justly asked the Income Tax and Super-tax payers to pay their fair share of the taxation of this country, that was their reply—to send gold away. [Laughter.] The hon. Member opposite may laugh, but I have a few more facts to tell him.
Possibly the hon. Member is not aware that there has been a very considerable development of what is known as the construction of holding companies in recent years. These holding companies exist for the purpose of transferring capital from this country to certain countries where Income Tax is very low or non-existent. In the State of Panama there is a holding company which exists for the purpose of attracting capital from this country and from all over the world. Money can be invested, and the interest is not returned to this country, but accumulates there in the form of coupons. That company is being used by certain people. I am not going to accuse the whole of the City of London, but certain people in the City of London. I shall not mention any names.

Lieut. - Colonel Sir FREDERICK HALL: You are protected in the House; there is no libel.

Mr. PRICE: There is in Switzerland a canton called Graz where Income Tax is very low, and there other holding com-
panies exist. There is a Duchy called Lichtenstein, where the Grand Duke is so well off that he can afford to do with out any Income Tax at all. There is another holding company there, in which capital has been accumulating while patriotic people here have refused an opportunity to the Lancashire Cotton Corporation to develop home industries. True it is that capital knows no country; it is not like labour, which has to stay here and work with the sweat of its brow for wages which capital tries to cut down and does cut down. Then there have been a number of companies formed, not holding companies, which according to my information are engaged in investing money in France. There are two. One of them is called the Anglo-French Banking Corporation, and the other the British and Continental Banking Company, Limited. There are prominent members of the British aristocracy who are members of these bodies. This is what appears in the prospectus of the Anglo-French Banking Corporation:
In pursuance of the above policy the company has acquired an important interest in the Banque des Pays du Nord, which was established in France in 1911, and has valuable connections in France and the Scandinavian countries.
I happen to know also that the British and Continental Banking Company was formed in 1926, the year in which the coal lock-out took place in this country, and that the British and Continental Banking Corporation is closely connected with the Union Des Mines, which is the banking company for all the big coal mining and iron and steel companies in the north of France. There is strong evidence justifying the belief that at the time when British miners were fighting for their lives in 1926, capital was going over from here to develop the mines in France. No doubt the Chancellor of the Exchequer is aware that this is going on. If he can do anything to stop it, I am sure that he will have the good will of those on these benches. It is time that the House of Commons should know it, and that someone got up and stated the facts.
This is the time when, as was said by the right hon. Member for Sevenoaks (Sir H. Young), we ought to "make every sacrifice" to meet the situation in the current year. But the right hon.
Gentleman's argument seemed to be that we ought to economise. He did not specify the kind of economy that we were to make, but he indicated that we should cut down the social services. He did not say so in so many words, but that was the implication of his reference to the inquiry into Unemployment Insurance. We feel that the time has come when the Chancellor should use all his influence with the Bank of England and with those who have as much power as he has, to bring about a more stable level of wholesale prices in this country and throughout the world, and push forward with the national development, without which he will not balance his Budget next year.

Sir F. HALL: When listening to the speech of the hon. Member who has just sat down, I wondered whether he was satisfied with the proposals of the Chancellor of the Exchequer or whether he was entirely opposed to them. The hon. Member dealt with reconstruction and gave us information with regard to breweries, electric light companies, gas companies and others, to show that there has been an increase in profits to the extent of something over 2 per cent. He also dealt with other industries in which he said that there was admitted profit of £1,750,900, and mentioned industries in which profits had depreciated by over £8,000,000 a year. I gathered that he desired some reconstruction of industries. No matter where we sit in this House we all desire to do all that we can to improve the conditions of labour and industry as a whole. Whatever the hon. Gentleman's ideas may be, I want him to realise that capital and labour can only get the best out of industry if they work hand in hand and recognise that there are difficulties on both sides. It is no good thinking that the man who supplies the capital has nothing but easy sailing.
The hon. Member referred to shipping. I wonder whether he knows that at the present time there is less shipbuilding going on than there has been since the advent of the steel ship. The work in progress in the March quarter was only 32,685 tons, or one-thirteenth of the work commenced in the corresponding quarter of last year. Does the hon. Member know, with regard to the shipping industry, that it is practically impossible
at the present time to send a ship to any part of the world and earn a single cent on the money involved? That is without allowing for depreciation, and it is well known that depreciation is tremendous during a ship's first two or three years. What is the result? Not more than 17 per cent. of the shipbuilding yards of this country are working at present. I think I may say that 25 yards have been closed recently and, as regards several others, when they have completed the contracts on which they are now working, unless there is a considerable improvement in trade, they also will have to close. These facts ought to be stated very plainly. It is easy to talk general platitudes as the hon. Member has been doing, without knowing the facts of the case.
There are three great industries which I may call fundamental, and by which the industrial pulse of this country can be tested. They are the shipbuilding trade, the coal and iron and steel trade, and agriculture. [HON. MEMBERS: "And textiles!"] Yes, the textile industry is also one of the chief industries. I am dealing more particularly with shipping because the hon. Member for Whitehaven referred specially to it as one of the fundamental trades which requires reconstruction. I would like the hon. Member to think over the subject and to tell the Chancellor of the Exchequer what in his opinion is the best way to deal with these important industries and restore them to prosperity. The hon. Member for Lincoln (Mr. R. A. Taylor) who is well up on these matters knows that some of these ships, usually called tramp ships, cost from £70,000 to £100,000, and yet after being completed by the builders they have been "hung up" and not put to any use. It has been found cheaper to "hang up" these ships instead of sending them to foreign countries. This simply means that we are not able to utilise our shipping. The goods are not there to be conveyed. The shipping industry is not being utilised, and consequently there has been enormous loss of money and an enormous amount of unemployment.
I had not the slightest idea that the hon. Member intended to raise this question, but recently I have been going into some figures relating to unemployment in the shipbuilding industry and I find, according to the returns, that there are 107,000 unemployed out of
201,000 generally employed in the industry. There must be some special reason for those figures. When we consider the fact that the amount of tonnage under construction is less than it has even been in the annals of shipbuilding, since the steel industry came into it, we must ask ourselves what is the reason for that state of things. The United States and France and Italy support their shipbuilding industries by means of bounties. I have always been against bounty-fed industries. I think that it is the duty of the Government in regard to these big industries to find out what is wrong with an industry, and endeavour to put it right, and the shipping industry ought to be put into a state by which the shipowner will be able to utilise his ships to plough the seas instead of having them hung up at home, and it will be possible to employ seamen and shipbuilders and engineers and others.
We must also consider that the costs of labour and construction in this country are much higher than in foreign countries. That is one of the reasons why there is such a tremendous depression in this industry. I notice that the hon. Member for Rochdale (Mr. Kelly) shakes his head. With regard to steel, for instance, it is easy for Continental shipbuilders to obtain steel at a much lower price that we can obtain it, and if we use, as we desire to use, British steel in the construction of our ships I would like to tell the hon. Member that it involves the difference of £2 a ton—which he knows to be a very important factor—between the price at which the Continental shipbuilder can contruct tonnage, and the price which the British shipowner has to pay.

Mr. KELLY: It was not in reference to the price of steel that I indicated dissent. It was at the hon. and gallant Member's statement as to the cost of labour. As one of the investigating committee in connection with the shipbuilding trade, I must say that that is not so.

Sir F. HALL: The hon. Member will excuse me for saying that if he will study the prices paid in this country, on the north-east coast and on the Clyde, and compare them with those paid in Italy and France, he will find that my statement is perfectly true.

Mr. RICHARDSON: Is the hon. and gallant Member adopting a fair way of ascertaining these costs? Will he give us the cost per ton as between France and Great Britain?

Sir F. HALL: I have not here the actual figures as to the cost of construction in France, but the cost of constructing an ordinary tramp steamer of 8,000 or 9,000 tons is, to-day, in the neighbourhood of £7 a ton, and it can be obtained at a much lower price on the Continent than in this country. I would impress on the Committee this fact—that the tonnage under construction in Britain at present is 921,000 tons less than it was a year ago, and the corresponding decrease in the case of foreign countries is only 345,000 tons. Some years ago Britain was building more ships than all the rest of the world, but now, only one-third of the world's tonnage is constructed in this country. I wish hon. Members would give careful attention to this matter, because this is one of our fundamental industries, and the question affects, not only the construction of ships, but the conveyance of cargoes and the utilisation of our tonnage for the general merchandise of the country. As regards the general principle of economy, we all want to economise. We have to economise, but if hon. Members opposite will excuse me for saying so, it is always with them a case of economising as regards other people, but not allowing anything to be touched which concerns labour. But we have all to come into line on this matter and recognise the difficulties from which the country is suffering.

Mr. RICHARDSON: Is it not a fact that the workers have given up £600,000,000 a year during the past few years.

Sir F. HALL: I am not raising any question as to what the workers have given up, but I wish hon. Gentleman opposite to understand that it is not only the workers who have had to make sacrifices but also the industrialists. The hon. Member for Lincoln said that Income Tax had not increased but Super-tax had increased. Super-tax has increased, not because a larger amount of money has been earned but because an additional burden has been placed by the Chancellor of the Exchequer on the Super-tax payers, and hon. Members
opposite may say what they like, but the Super-tax payers have been a great help to Chancellors of the Exchequer in recent years. We have heard all sorts of suggestions about the raiding of hen roosts. I suppose there are not many more hen roosts which can be raided, but I would like to pay my tribute to the Chancellor of the Exchequer on the manner in which he has faced a difficult situation. I am delighted that the right hon. Gentleman has recognised the difficulties under which trade and commerce are at present being conducted in this country.
Hon. Members opposite sometimes seem to think that there is a constant supply available from taxation and that it does not matter what proposals the Chancellor of the Exchequer brings in—that if he puts an additional 6d. or 1s. on the Income Tax and something further on the Super-tax, it will be all right and he can get the money. But the Chancellor of the Exchequer has recognised, notwithstanding all he has said in the past, that the time has arrived when further direct taxation is more or less impossible. I am very glad that the right hon. Gentleman is optimistic. I like to see optimism. One cannot see his optimism being justified, however, unless there is a considerable improvement in trade during the next 12 months, and I sincerely hope that his anticipations in that respect will be realised to the full. I am not one of those who believe in running up debts. I have always said that one's first duty is to discharge one's liabilities, and that if there is an increase in national expenditure it has to be met either by taxation or by a corresponding reduction of expenditure.
I hope that during the forthcoming year we may see considerable savings in the matter of expenditure and that the Chancellor's hopes with regard to an improvement in trade will be realised. In 1924 the expenditure was £795,770,000, and in 1930, notwithstanding that the cost of articles had been reduced very considerably, the expenditure was £881,037,000. But there was this difference, that the revenue in 1924 exceeded the expenditure by £3,659,000, whereas unfortunately the revenue in the year that we have just finished bas left a deficit of £23,276,000. If the hopes of the Chancellor are
realised, he is taking £20,000,000 from the Currency Fund, £7,500,000 on his Petrol Tax, and £10,000,000 by dating forward the Income Tax, which I am sure will be found very hard on some of the small Income Tax payers.
I am a great believer in the British people facing up to their difficulties. We have passed through bad times before, and I am not one of those pessimists who believe that we are always on the brink of bankruptcy. We are in difficult times, and we have to get ourselves out of these difficulties, and I think the Chancellor of the Exchequer has acted in a very judicious manner in recognising the difficulties with which we are faced and in deciding that no further taxation shall be imposed. When you have your present unemployment rate and are fixing that up by borrowing £1,000,000 a week, have the Government considered what they are going to do with regard to that matter? You cannot carry on with a big debit balance against you the whole time. If you have £50,000,000 or £60,000,000 standing out as a debit balance against the Unemployment Insurance Fund, is it going to be funded, or is it still to be carried on as a debit balance? I should like the Financial Secretary to the Treasury to tell us what are the intentions of the Government with regard to that matter.
There has been a proposal from some quarters of the House with regard to the taxation of company reserves. I do not know how far that carries one. I was always under the impression that before you had a reserve it came out of profits, and according to my knowledge of business in the City, I find that the Chancellor of the Exchequer looks carefully to see that taxes are paid on all profits. Surely it is not the intention, because people have been reasonable in their business and have not divided up the whole of their profits, without looking forward to times of depression, that there should be a further tax on industry and that those responsible for the finances of those companies should be debited with an additional Income Tax, taken out of the shareholders' money. I cannot think that that will be recognised as a reasonable proposal, and from what I know of him, I do not think the Chancellor of the Exchequer would give that matter serious consideration. In any case, I certainly
trust that my hopes and anticipations in that matter are correct.
As the Financial Secretary to the Treasury knows, I have raised during Question Time recently the question of Income Tax collectors. I believe that those collectors, who are up to the present under the control of the local Commissioners, are to all intents and purposes those who were provided, when the Income Tax was started, to look after the interests of the taxpayers themselves, and being under the command of the local Commissioners, who are not part of the Inland Revenue, it was recognised in the old days that there should be some consideration given to the taxpayer. Although this question has been brought up a great many times, I trust that the Government will give it their most careful consideration before they decide to make any change. The taxpayer at present feels that he has someone who looks after him. It would ill become me to say that the Inland Revenue officials were inhuman or anything like that, but for goodness' sake let the taxpayer have that buffer and the satisfaction of thinking that he can go to someone who is free from the Inland Revenue authorities. I hope the Government will not make any alteration in that matter.
I would like to say a final word with regard to industry as a whole. I never try to go behind a smoke screen or to hide my principles. I am and have always been a confirmed Protectionist, and I use that word perfectly plainly. When I look around and see in my own country £250,000,000 or £280,000,000 worth of manufactured articles that were imported without paying a penny piece for the utilisation of my markets, I say that if other countries would give me the same advantages, it would be all right. In matters of business, I am prepared to deal with you if you reciprocate, but here there is no reciprocity. Those goods, which are manufactured in many cases under conditions to which hon. Members opposite and on this side also would be no party, are allowed to come in here bearing nothing towards the cost of the Army, the Navy, or the Civil Service. They put out of work a vast number of our own mea who are not desirous of continuing to receive out-of-work re-
lief week by week. The Englishman wants to earn his money, and he wants an opportunity of earning it, and it is the duty of the Government to see that every facility is given to the working people of this country to use their labour and to obtain employment.
I know very well that the Chancellor of the Exchequer is adamant so far as he is concerned, but, with all deference to him, he is but one member of the Government. He may be a very dominant member, but I know there are some other members of the Government and many hon. Members opposite who are of the same opinion as I am and who think that what is good for other countries where they have tariffs may be good for us, too. I have every hope that if we do not get some change in our tariff system before long, the day is not far off when those Members of the party opposite who question the advisability of making no change in our tariff system will vote with us. Let us go to the country, and we will nail our flag at the masthead and say, "We are out for a change in our tariff system, because we believe it is for the good of the country as a whole." I look forward with hopeful anticipation to the day when we shall get an opportunity of appealing to the country, and I have no doubt in my own mind what the result will be.

Mr. E. C. GRENFELL: It is only proper, as representing the City of London, that I should express some interest in what is called the financial statement. At first the City seemed inclined to welcome the speech and the views of the Chancellor of the Exchequer. They are well aware of the difficulties of the situation, the conditions of trade, and the obstacles to balancing the Budget, but on reflection doubts occurred as to whether this was a financial statement at all, and further as to whether it was a correct one, and when they gave further thought to it, I agreed with several of them that if any company of repute had presented such a statement and asked that anyone should lend that company money, and had obtained it, that company and its officials would have obtained it under false pretences. I do not hesitate to say that, though there has been criticism of certain people engaged in
business, anyone who had presented such a faked statement as this would certainly have been sent in due course to what is called a house of correction.
The whole world has looked at our Budget statement as showing exactly the position of this country, and when a Chancellor of the Exchequer has told the world and this country that his Budget was balanced and that he was paying off debt, they have taken that as a true statement. To-day, this Budget statement is a statement, first of all of figures, and next of pious hopes, and the great difference between this statement and those of the right hon. Gentleman's predecessors is that it is distinguished by its omissions. We know that the Chancellor of the Exchequer was aware of the bad state of the country a year and a half ago. He made statements showing that, with Income Tax at 4s. and Super-tax at 6s., this country was suffering the heaviest burden of any country and that to that fact was largely due the depression from which we suffered. In his Budget a few months later he increased the Income Tax, the Super-tax, and the Death Duties, and that surely made him fully aware that he perforce was adding to the difficulties of the country and increasing the depression.
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So sensible was he of that fact that he allowed his chief official at the Treasury to give evidence before the Royal Commission. I am not accusing the Chancellor of the Exchequer of attempting to conceal anything. When evidence was given by that distinguished official indicating that the pursuit of the course which we were then adopting meant that we were not going to balance the Budget, due notice was given to this House, and the Chancellor was fully aware that we were going down the path which has led other countries to destruction. I cannot understand how the Chancellor is able to buoy himself up with the two hopes which led him to think that the country would get through. One hope was that there would be a recovery in trade. I regret to say that there is not to my mind the slightest indication of that here or elsewhere. The world is to a large extent one, and I do not think we shall recover until other countries recover. The blame is not entirely on us, but there are no symptoms of improvement which
lead me to think that the Chancellor was justified in buoying up himself, or the country, with false hopes. The second indication he gave of what he hoped might remedy some of our misfortunes was the report of the famous May Committee. I am getting pretty tired of these committees and commissions, but the Chancellor himself has no more love for them than I have. What have these committees and commissions done in the past? Each Government, Conservative and Socialist, has got into the habit of appointing committees and commissions on every conceivable occasion. Sixty or 70 of them have been working or are now acting. Whom do they get to sit on these committees and commissions?

Mr. SANDHAM: Experts.

Mr. GRENFELL: That is exactly what I thought would be said. They get learned professors, leaders of industry, and judges of the High Court, and they give them a secretary, a man full of ability, from the Civil Service. They then permit or instruct these committees and commissions to get further experts to give evidence; they occupy the time of these judges, professors and witnesses, and often use a judge as chairman. At the end of months, sometimes years, reports are presented, but seldom are they made use of. They are, as a rule, put in a corner, and the time of these business experts and judges has been wasted. The appointment of these committees and commissions, however, gives a little rest to Ministers, and allows them to say that they are doing something or letting somebody else do something. They ask all these experts and business men to leave their businesses and waste their time and the Government's money in presenting reports to which no attention is ever paid. If the Chancellor of the Exchequer is hoping that that kind of thing will get him out of his difficulties, it is but a slender reed.
I have been connected with a great many companies of various sorts, and I have now left most of them, fortunately for myself, but I can assure the Chancellor that any of those great institutions which have got into difficulties in the last few years have not done so through any fault either of the masters or of the men. There are circumstances over which neither have control, but I do think that the economies suggested will have to be
practised by both sides. A previous speaker produced certain figures with regard to shipbuilding, shipowning and ship employment. They were very grave figures. We have got to the point where, instead of our producing 50 per cent. of the world's tonnage, we are hardly producing any. At the beginning of this month practically all yards were free of fresh orders. That is a most serious thing, because it means that we are not only not employing the men in building, but not employing the men in running the ships. There is hardly room in the ports of England to moor the ships, many of them new, which are laid up, and for which there is no employment. I can assure the Committee that in many cases when a ship comes home and the owners decide to lay her up, they have the greatest difficulty in finding room to moor her. You have only to go to the Clyde or to Southampton or to other places where there are mooring facilities, to realise that. It is one of the saddest sights I have ever seen. It is terrible.

Mr. SANDHAM: Good old capitalism!

Mr. GRENFELL: It was said in the Committee yesterday that it was not patriotic to explain the state of the country publicly. Let me say this as regards the present financial statement in the Budget, that the Chancellor has no wish, I am sure, and I do not intend, to conceal anything about the state of the country. If this Committee do not understand it, they ought to; if the City do not understand it, they ought to. Whether they understand it or not, I would assure the Committee that in every bank in Paris, in New York, in Berlin or in Basle, where the new International Bank sits, they know all these particulars about the finances of every other country, including our own. This country has been an example to them all; long may it remain so, but it will not remain so, and other countries will not take our experts, as they have done in Australia, or Brazil and elsewhere, to advise them in finance, unless we rigidly adhere to our old principles. One of these principles is that this financial statement should tell the case and the whole case, and that nothing should be omitted. I have been occupied in my life in several reconstruction schemes for foreign countries. I have prepared schemes, as the right hon. Member for Sevenoaks (Sir H. Young)
has done, and they have all been based on what I thought was the English tradition. Long may it remain so, and for ever I hope there will be a frank statement to this House, which will be encouraged to know the worst as well as the best.

Mr. OSWALD LEWIS: There is a certain consciousness among Members of all parties that this week we are taking part in an historic Debate, because it is probably the last time that the House of Commons will be asked to discuss a Free Trade Budget. [Interruption.] I can quite understand that the prospect thus opened up is not a gratifying one to hon. Members opposite, but they will gain nothing by shutting their eyes to the facts. The Chancellor of the Exchequer showed in his Budget, and in the speech that he made in introducing it, that he realises, as some of the quicker-minded of those who sit behind him will soon realise, that the limit of direct taxation has been reached, if not passed. That means that under Free Trade no more money will be available for further expenditure, whether on social services, on defence, or on any other public objects. It means more than that. It means that under Free Trade we are unable at this moment to provide for our current expenditure out of current income. The Chancellor of the Exchequer did not seek to hide the fact. He pointed out, in effect, that be had two alternatives before him. One was to broaden the basis of taxation by indirect taxation added to direct taxation; in other words, by some method of tariffs to supplement our existing direct taxation. The other alternative was for the time being to live on our capital. The Chancellor yesterday unsaid a good many things that he had said rather bitterly in the past few years, but he was at least consistent in one thing. He was as determined a Free Trader yesterday as he had been all his life. I do not think that the Committee expected to hear from him the announcement of a tariff. He was, therefore, driven to take the other alternative, to live for the time being upon capital.
Neither the Chancellor of the Exchequer nor the Financial Secretary to the Treasury, nor, I think, anyone who has spoken in the Debate, has pointed
out the full extent to which we are at this moment living upon our capital. The first figure to which I would direct the attention of the Committee is that of the amount realised for Estate Duties—£82,610,000. That is a direct tax upon capital. It is spent by the State, and it is therefore a diminution, in effect, of the capital of the country. The next item is the Rating Relief Suspense Account. That is capital not in private, but in public hands, but it represents part of the gross capital of the country. There a sum of £16,000,000 was used, so that last year, in order to balance the Budget, we used up £28,610,000 of private capital in the form of Estate Duties, and £16,000,000 of public savings which had been set aside in the Rating Relief Suspense Account, making a total of £98,610,000. I am aware that to the extent to which that money was applied to the reduction of Debt, it was not a capital loss, because, if the State uses capital money to pay off capital liabilities, it is in the same position as a private person doing the same thing. It does not thereby diminish its total capital.
Therefore, in order to see how much we are over-spending and drawing upon our capital, we must consider what the position was in regard to the redemption of Debt. The figure given for sinking fund of £66,830,000 does not represent in any way the net reduction of Debt. The Chancellor of the Exchequer put the figure of actual reduction of Debt at £43,554,000. If we take that sum from this capital sum of £98,610,000 to which I have referred, we find that we have overspent capital to the extent of £55,056,000. But that is not the whole of the case, because when the Chancellor of the Exchequer told us that the actual reduction in debt last year was £42,000,000 he neglected to remind us that in that calculation he was taking no account of borrowings for unemployment insurance. Therefore, I have to add to the figure of £55,000,000 of capital spent another £40,000,000 for money borrowed for unemployment insurance. From that record we find that, in respect of last year, as shown by the figures put before us by the Chancellor, supplemented by the accounts of the Unemployment Insurance Fund, this country actually used up a capital sum of £95,000,000.
In the current year the position will be worse. The corresponding figures for the current year are as follows: Estimated Estate Duties £90,000,000—that is private capital to be used up; Rating Relief Suspense Account, £4,000,,000—that is public savings to be used up; and Exchange Account, £20,000,000—another form of public capital to be used up. They make a total of £114,000,000. Against that has to be set a Sinking Fund of £52,000,000, and, assuming that to be the actual amount of debt reduction, we get a balance of £62,000,000 of capital which it is intended to spend in the current year. There, again, no allowance is made for unemployment insurance. We have been told repeatedly that the borrowings for unemployment insurance amount to somewhere about £1,000,000 a week. Suppose I take it as £52,000,000 for a year. If we add that £52,000,000 to the £62,000,000 referred to we get a figure of £114,000,000 of capital which the Chancellor of the Exchequer proposes to spend this year in order to make his Budget balance. Having used up a capital sum of £95,000,000 last year, he proposes to use up a capital sum of £114,000,000 this year; and in arriving at that figure he has been obliged to anticipate revenue to the extent of £10,000,000 by his device for the alteration in the payment of Income Tax, has had to take a comparatively optimistic view of his revenues, and to ignore absolutely the possibility of Supplementary Estimates.
It is alarming that we should see, not in one year only but in two years, this deliberate using up of the capital resources of the country for our current needs. The Chancellor laid stress, as he was entitled to do, upon the exceptional severity of the trade depression, but even with a very considerable trade revival we might still find some difficulty, under our present system, in obtaining sufficient to bridge the gap of £95,000,000 in one case and £114,000,000 in the other. And what of all the avowed intentions of supporters of the Government to incur further expenditure on improving the social conditions of our people? How is all the money to be found? If we continued living upon our capital the end would very quickly come. Our credit would go first, and as that went so would the general standard of living of our people decline. It is no use trying to
blink that fact. You have only to overspend your capital for a comparatively few years for those two effects to follow—a loss of credit and a lowering of the standard of living.
We ought, I suppose, to be grateful to the Chancellor for this at least, that he has disposed of some of the wilder theories of his colleagues, such as the statement made by the Minister of Health that what a country wanted badly enough it could afford. That statement, and other nonsense of that kind, has received a very severe snub from the Chancellor of the Exchequer in his Budget statement. On the other hand, the country must continue to suffer, while the present Chancellor remains at his post, from his attitude on fiscal matters. Unless we get a reduction in public expenditure on a scale of which there is no sign whatever to-day, we cannot continue, under our present Free Trade system, to find what we require for current needs, and therefore some broadening of the basis of taxation by means of indirect taxation is absolutely necessary. The longer it is delayed the worse for all concerned.

Mr. LOCKWOOD: After passing a few days in listening to the speeches of hon. Members on both sides of the House one's material evaporates somewhat, and, perhaps, one's knowledge is enlarged. This afternoon we have listened to several admirable contributions to this Debate, particularly those of the right hon. Member for Epping (Mr. Churchill), the right hon. Member for Sevenoaks (Sir H. Young) and the hon. Member for the City of London (Mr. E. C. Grenfell). The hon. Member for Birkenhead East (Mr. White) said many things to which I take strong exception. We do not accept for one moment his allegations that our industry is not as efficient as the industry of any other country, that we do not send as competent representatives abroad to get trade, and that we cannot turn out articles as good as those of any other country. I will give an illustration because we get far too many generalities in this House. In the wool textile trade we have done the most widespread business throughout the world that any country could possibly wish to do. It is not through lack of salesmanship or through lack of goods that we are unable to get business to-day. We are not getting trade to-day because we are unable to produce at the price.
I will give an illustration. Not long ago a Bradford merchant came to me and stated that while in Shanghai he had said: "I will entertain to dinner every traveller from Bradford who happens to be in Shanghai at this moment." The House will be surprised when I say that that gentleman had to entertain to dinner 80 representatives from the district of the West Riding of Yorkshire. Therefore, I take the strongest exception to hon. Members in this House making statements which are published abroad to the effect that our trade is declining because we have not efficient trade representatives abroad, and we cannot do this and the other.
The hon. Member for Whitehaven (Mr. Price) gave some rather startling information to the House. He referred to the Bank of England, and said it was possible for the Bank of England to cure all the ills from which we are suffering at the present time. The hon. Member for Whitehaven also referred to another matter to which I take exception. He referred to the Governor of the Bank of England. The Governor of the Bank of England has no seat in this House and has no responsibility for the deliberations in this House, and the more we realise that the Bank of England should be kept out of party politics, the better it will be for this House and for the Bank of England.

Mr. PRICE: Does the hon. Member imply that we are not allowed to criticise or say anything about the policy of the Bank of England?

Mr. LOCKWOOD: The policy of the Bank of England, like the policy of any other organisation in this country, is subject to criticism, but we do not wish to drag the Bank of England into the political considerations which arise in this House. The hon. Member for Whitehaven also referred to the question of rationalisation and reorganisation, and he gave that as a reason why we were not getting trade. Again, the hon. Member is completely wrong. I happen to be primarily interested in industry more than in politics, and for a long time I have been engaged in breaking down impossible rationalisation and endeavouring to get individuality, economy and efficiency into business so that it can prosper. Allusion has also been made to the Lan-
cashire Cotton Corporation which has been brought into being to reconstitute the cotton trade. If ever there was an instance of failure before the start, I think that will be one. A concern which has to borrow money at 6 per cent. on first debentures at a discount and then cannot produce 10 per cent. of the amount offered is a failure to start with. I have paid much attention to the Debates during the last two or three days because this happens to be my first experience of a Budget. Here we are in this House discussing the raising of more than £800,000,000 of public money and its allocation. I have been somewhat disappointed with the back benchers, not because hon. Gentlemen opposite have not been attentive throughout the Debate, but because their speeches have shown a lack of knowledge on the questions we have been discussing and the circumstances which surround them. I have been disappointed because of the lack of broadmindedness displayed.
I admire the Chancellor of the Exchequer for some things. First of all, he is a thorough Yorkshireman; and, secondly, he has a sterling belief in his own opinions and a determination to carry them out. I admire him for that. I admire the right hon. Gentleman for his presentation of the Budget, but there are many things for which I do not admire him, and one is the obstinacy with which he adheres to beliefs which have proved to be wrong, and which are known to be wrong by a majority of persons connected with trade and industry in this country. As politicians, the Members of the House of Commons to-day are in very poor repute—[HON. MEMBERS: "No!" and "You mean the Tory party!"]. Perhaps hon. Members will permit me to say in this House what I have heard outside. I do not say that I do not do everything in my power to prevent such an opinion spreading, but there is a lack of faith. I have heard hon. Members opposite say that they wish we could do away with the word "politicians" and call ourselves "statesmen," and with that I thoroughly agree. I think we ought to be statesmen, and, when we call ourselves, by the honourable name of parliamentarians or statesmen, when we have a proposition before us like the one we are now considering, let us bring to the problem the attitude
that is expected from statesmen and parliamentarians.
In discussing the Budget, we should first consider the circumstances under which it is introduced. What are the surrounding elements which we ought to take into account in considering the Budget itself? Ours is a sturdy nation, a wealthy nation, and a nation of the highest and best type of inhabitants on the earth. I know that is rather self-congratulation, but I believe it is so. What are the circumstances in which we are placed to-day? We have an admitted over-taxation, which is not a very bright feature. We have unemployment of terrible dimensions whatever may be said by hon. Members opposite about the state of unemployment in America and other countries. At the present time, we have more than 2,500,000 unemployed in this country, and I say with all seriousness that we have a crumbling industry. I am giving my experience outside the House, and I do so with the greatest pleasure because I am a newcomer, and I am still very much impressed by outside information. We have a crumbling industry and we have an Empire which seems to be—I will not use the word I have on my notes—in difficulties at the moment. If any hon. Member wishes to have authority for my statement, he does not need to go further than the Chancellor of the Exchequer.
The right hon. Gentleman has admitted all these facts and consequently, when we are considering the Budget, we have to consider it in the light of those circumstances. Perhaps I may be excused for regarding the position of a Member of Parliament as being one of responsibility. I have heard it said for a long time that our primary duty is to secure, so far as we can, peace and happiness and truth and justice. When we are discussing a Budget, we are exercising one of the main privileges of the House of Commons, that is to say, the provision of money and the control of its expenditure. As Members of Parliament, are we fearless, and are we doing what we ought to do to protect the rights and privileges of the House of Commons in that respect? I say that we are not. I say that, with the consent of this present Government, we are handing over to all sorts of outside committees the control of expenditure—of what is recommended,
how it should be raised, and how it should be spent. All these matters we have referred to committees of one kind or another, and I say that in so far as we do that, and in so far as the President of the Board of Trade, who is representing the Government here at the moment, accepts those recommendations without a full knowledge on the part of the House of the real facts which are in his mind, we are delegating the most priceless possession that we have, namely, the control of taxation. When I make these statements, I have in mind the Goverment's Economic Advisory Committee. We have been told over and over again that we are to be debarred from having any of the opinions and information furnished by that Committee. How, then, can we properly criticise or assist the Government if we are to be debarred from information?
The Budget has five main features. The Chancellor of the Exchequer, in the first place, has failed to present a true balance sheet. He has omitted the liability in respect of the Unemployment Insurance Fund. I will not enlarge upon that matter, because the hon. Member for the City of London has just done so. In the second place, the Chancellor has utilised capital for income, and that also has been dealt with. In the third place, he has anticipated income. That, again, has been dealt with and criticised. In the fourth place, and this, perhaps, is the most sensible of all the features, he has put a tax upon oil, which is at present taxed. I do not know that there is much to be said against that particular feature. The fifth point is that he has left a surplus for contingencies of little more than £100,000. Those are the broad features of the Budget. I do not wish to go into them in detail, but the main fact, so far as I am concerned, is that the whole basis of the Chancellor's proposals is that he has in his mind the prospect of a recovery in trade and business.
So far as the woollen textile industry is concerned, there is no hope of an immediate improvement in the prospects of trade and employment. Our prices are too high; the trade has already shrunk by one-third; one-third of the operatives are out of employment; and there is not the slightest prospect of any improvement at the moment. Indeed—and I would like
the President of the Board of Trade to bear that in mind—the effect of this Budget, and of the speeches that have been made in regard to it, is that another place at any rate will close down in Yorkshire, because that place manufactures moquettes, which cannot be manufactured in that district at the price at which they are imported into this country from Germany. Efforts have been made by patriotic people who have provided capital to carry on that trade, but, after the pronouncements which have been made to-day, there is not the slightest hope of the continuation of that business.
If the Chancellor of the Exchequer has based his Budget on something which we know cannot possibly happen, is he meeting the House of Commons with truth, is he elucidating the position to the nation, is he going to do anything for the 2,500,000 unemployed, is he going to do anything for any of those in whom hon. Members opposite profess to have such a great interest? Hon. Members opposite do not give us at any time the slightest credit for having the same interest, but, nevertheless, it is there. I want to point out that the only means of bringing about a recovery of trade and industry—and this is the opinion of many hon. Members opposite, and is the opinion of the trade union leaders in every basic industry—is for the Chancellor of the Exchequer and the Government to throw overboard altogether his Free Trade notions, and to adopt a system of Protection wherever it is necessary to protect the people in whom hon. Members opposite profess to have such a great interest. If that were done, there might be some justification for the optimism that the Chancellor has expressed, and for supposing that this Budget may close at the end of the present financial year on the lines that he has laid down. Otherwise, there will be no confidence whatever in the country, and the only solution that there can be for the position is the substitution of a new Government which will bring confidence, and also the alteration in our fiscal system which is so necessary for the revival of trade in this country.

Mr. GODFREY WILSON: I am one of those who was rather surprised to hear that this Budget was received in the House of Commons with relief, and in the
public Press with the same feeling of relief. For my part, I should like to support the views expresed by my right hon. Friend the Member for Sevenoaks (Sir H. Young) when he denounced the principle of the Budget as wholly and absolutely dishonest. I listened with a good deal of attention to the speech of the right hon. Gentleman the Member for Darwen (Sir H. Samuel), and I could not help asking myself what that speech would have been if the Budget, instead of having been produced by the present Chancellor of the Exchequer, had been produced by Members sitting on these benches. I venture to say that the right hon. Gentleman's denunciation of the proposals then would have been a great deal more violent than his commendation of the speech of the Chancellor of the Exchequer.
It is the custom to mention the name of Mr. Gladstone in connection with such matters, and I should like to know what Mr. Gladstone would have said about these proposals. I do not think he would have supported the opinion of the right hon. Gentleman the Member for Darwen. The right hon. Gentleman challenged Members on this side of the House by asking whether we would be prepared to support the opinions which have been expressed by Mr. Maynard Keynes and Sir Josiah Stamp. I confess that for my part I would. I have always been a Free Trader by conviction, but I cannot but feel that we do not get Free Trade, or anything approaching Free Trade, and that some change in our fiscal system is undoubtedly necessary. I would go as far as Mr. Maynard Keynes and Sir Josiah Stamp have gone, and would institute a general tariff on all manufactured goods and I should be prepared to regard it as an emergency tariff. The right hon. Gentleman the Member for Darwen says, "You call this a revenue tariff, but at the same time you expect it to help by reducing the number of unemployed." Surely, it would have one or other of two alternative effects. Either manufactured goods which our unemployed are perfectly able to produce for our consumption would be kept out of the country by a revenue tariff, thereby giving employment to some of our unfortunate 2,500,000 people who are unemployed at the moment, or, if that were not the case, at least we should get
revenue which would help to meet the financial obligations of the country.
I always feel, when talking on the tariff question, that there is considerable danger of thinking it is a simple problem which can be treated in a mathematical sense, with two or three unknown quantities and two or three equations. It is a very much more complicated question than that. But I am converted to Tariff Reform sympathies for another reason. If it would do anything whatever—and I believe it would—to reduce the number of unemployed, there is one factor which I think is beyond all value, and that is the moral factor which will undoubtedly follow from the reduction in the number of our unemployed. Feelings of despair and self-depreciation would be replaced by feelings of hope and self-respect, and that is of more value than anything that could be measured in pounds, shillings and pence.
I listened again with a good deal of interest to the speech of the right hon. Gentleman the Member for Epping (Mr. Churchill). I could not help but appreciate the natural elation which he expressed at the proposals now made by the Chancellor of the Exchequer, although I am afraid I cannot quite join in the approval that he bestowed. I am a comparatively new Member of the House, but when the proposals of the late Chancellor were made, I think, had I been here, I should have voted against them. I feel very strongly that this Budget is financially dishonest, and I cannot join in any of the expressions of approval which have been given. It seems to me to reveal a standard of financial dishonesty which has been absent from any previous Budget statement. Last year, apparently, there was an ordinary income of £776,000,000 and an ordinary expenditure of £732,500,000, leaving a surplus of £43,500,000. The Chancellor claims that by this amount the Debt of the country has been reduced, but he completely fails to remind the House that in the meantime loans to the extent of £35,000,000 have been contracted for the Unemployment Insurance Fund. Those loans are a liability just as much as the Funding Loan, the War Loan or any other, and ultimately they have to be met. When you deduct that from your £43,500,000, your net reduction amounts only to
£8,500,000. The Chancellor would have been better advised if he had faced that position and told the country exactly where we stood. Take the figures for this year. The estimated revenue is £766,000,000 on the basis of existing taxation, and the estimated expenditure £803,500,000. Provision is made for a Sinking Fund of £52,000,000, and there is an estimated deficit of £37,500,000. Again the Chancellor is completely silent on the subject of the Unemployment Insurance Fund. The debt is accumulating to the extent of £1,000,000 per week, exactly enough in the course of the year to wipe out the Sinking Fund.
I join in the criticism which has been made by others in regard to the estimate which the Chancellor has given us. He bases his estimate on the assumption of an improvement in the industrial situation, but he completely ignores the fact that any such improvement will be accompanied by a time lag and that it will need a year, or even two years, of industrial improvement before the effect on the Revenue will become appreciable. In fact, at present the time lag is in favour of the Chancellor. He has been collecting his revenue for the past year, and for one or two years previous to that in which earnings and profits have been better. He seems to me to have overestimated his revenue by about £10,000,000. He has, therefore, to make some provision for a deficit of about £47,500,000, instead of £37,500,000. I have cancelled out the increased loan for unemployment insurance against the £52,000,000 for the sinking fund, so that during the year the situation seems to be that, apart from any increased taxation, there would be a deficit of £47,500,000 without any appreciable change in the amount of Debt with which the country is faced.
How does the Chancellor propose to meet this £47,500,000? He is putting on an extra tax on petrol, which I cordially support. That will give us about £7,500,000. I join issue with the Chancellor in regard to the piece of jugglery by which we are going to collect in advance one-quarter's Income Tax on certain schedules and bring it into the income for the year. If any company director were making a suggestion of that nature, it would not
be very long before he found himself before a magistrate. He is going to raid the dollar fund to the extent of £20,000,000, and he is taking another £3,000,000 of the profits which that fund has earned in the past. That, to my mind, is about the worst feature of the whole Budget. He is deliberately using capital to meet annual and recurring expenditure. It is exactly on the same footing as a company which pays dividends out of its capital, and we know what happens when that is done. There is nothing whatever to justify action of this nature, and it is to be condemned on every principle of financial honesty. The Chancellor, to my mind, is gambling desperately on chances, and it will be the community that will suffer if that gamble does not come off. He is going to hand on the burden of the responsibility, in the event of failure, to the next Chancellor, and I feel pretty certain that in his own mind he is hoping and praying that he will not have to face the situation a year hence.
To sum up, it seems to me that the Chancellor is proposing to meet the current expenditure, first by the use of a large capital sum, and, secondly, by the anticipation of revenue. When he has done that, he will still have a deficit, with no reserves whatsoever to meet what invariably occurs, a demand for increased money for Supplementary Estimates, and no provision whatever is made, notwithstanding the statement last year for wiping out last year's deficit. The people who will suffer from all this are not those whom hon. Members opposite are pleased to regard as capitalists. I am not a capitalist by any means. I have been a working man all my life, as much as hon. Members opposite. The people who will suffer are those whom they claim to represent, namely, the hard-working classes. You have only to look to my own native country of Australia to see the effect that this kind of finance produces. Australia, unfortunately, has not got large reserves which it has accumulated in the past and which it can bring forward to meet a special emergency of this kind. I speak from a very intimate knowledge of the conditions existing in Australia when I say that the people who are suffering more than anyone else are the working-classes. The working-classes of this
country will be the first to suffer from the Socialistic legislation which involves vast expenditure and leads to a country living beyond its means. I have, therefore, no hesitation whatever in saying that I cannot join in any of the congratulations of the Chancellor of the Exchequer on the effort which he has made to balance his Budget.

Mr. MUFF: I should not have intervened in this Debate if I had not had the privilege of listening to the speech of the hon. Member for Shipley (Mr. Lockwood). Like him, though from a different end of the scale, I know a little about the textile trade of the West Riding of Yorkshire. I am not going to emphasise the point except to say that there was a report issued in favour of Safeguarding, and that I do not think it would have touched the particular class of article mentioned by the hon. Member, namely, the cloth which is called moquette. That report ruled out all cloths which were, I believe, over 9.9 ounces in weight, and therefore it would not have touched that class of cloth at all. Moreover, I would remind the Committee that the report was issued in sufficient time for the late Conservative Government to have given effect to it if they had had any real confidence in it or believed that it was worth the paper upon which it was printed. As a matter of fact, I believe that the home trade of the West Riding was never better. What we want is a larger export trade. I am afraid that a tariff would not help us towards getting a greater expansion of the export trade.
9.0 p.m.
While I have every sympathy with the hon. Member for Shipley in what I know are sincere efforts in trying to better the West Riding trade, I am not inclined to be as pessimistic. I would remind him that a late Member of this House who is now a member of the other place, Lord Barnby, recently pointed out that the West Riding textile trade is looking up. I, therefore, ask my hon. Friend to be of good cheer and not to be so pessimistic in his outlook, because from what we have heard from the Conservative Press and from leaders opposite, the Budget almost seems to be a perfect Budget. In fact, our trouble is that so few people are condemning it, especially on the other side, that we are inclined to think that there is some
catch in it. The hon. Member for Shipley was rather sorry that the Chancellor of the Exchequer had left a margin of only £130,000 as surplus. I, also, am rather sorry. The Chancellor of the Exchequer might have taken away a grievance from one distinguished Member of this House who, unhappily, we shall see no more upon these benches, or in this House as long as this Parliament lasts, or even, I am afraid, any other Parliament. The hon. Baronet the Member for Smethwick (Sir O. Mosley) told us that those whom he termed the "old women on the front benches" had made him the pampered darling of the rentier class. I regret that the Chancellor could not have taken that grievance from the hon. Baronet and made him a firm friend of the Government by putting a tax upon the dividends from gilt-edged securities. I believe that even in the City they expected what they termed a coupon tax to be put upon the dividends of Government stock. I am sorry that the Chancellor has lost this opportunity of placating this new party, which, I am sorry to say, will not be with us any more during the lifetime of this or any other Parliament.
There is another matter to which I wish to call attention. It does not interest the West Riding, but it interests the constituency which I have the honour to represent. One of the staple industries in the East Riding is the production and manufacture of paint and varnish. We use considerable amounts of what are called hydro-carbon oils as raw material in the manufacture of paint and varnish. These oils are of a different nature from petrol, but, still, there is a handicap in the trade and manufacture of paint and varnish owing to the imposition of a tax upon this class of hydro-carbon oils. Though a rebate is supposed to be given upon those oils, there is a hardship in their manufacture, and I appeal to the President of the Board of Trade, as representing the Chancellor of the Exchequer in this matter, to review the impost of the tax upon oil used in the manufacture of paint and varnish and see if it cannot be remitted altogether, so that this important trade which is carried on at Kingston-upon-Hull will have absolute freedom to get its raw
materials without the imposition of a tax, or intricate machinery for the claiming of a rebate.
With the exception of the hon. Member for Cambridge University (Mr. G. Wilson) and the right hon. Gentleman the Member for Sevenoaks (Sir H. Young), there seems to have been a universal paean of praise of the Budget, and in view of the fact that it has also received the benediction of the right hon. Member for Epping (Mr. Churchill), I am afraid, as I said at the beginning, that there must be some snag in the Budget. I hope that there is not, and that it will work, as I believe every one wishes it to work, for the prosperity of the community. The right hon. Member for Epping in his closing benediction stated that the Budget, at any rate, gave relief both psychologically and in other ways, and we hope that Members opposite will join with us in trying to get a new atmosphere, so that instead of talking so pessimistically and joining what I call the all-is-lost-brigade, we shall gird our loins and see if we cannot restore the prosperity of the trade of this country.

Mr. CAMPBELL: The snag in the Budget, as I see it and as the City of London sees it, is that it is a gamble at the expense of somebody else and not at the expense of the Chancellor of the Exchequer. It is a gamble which trade and commerce does not appreciate. As there are other hon. Members who wish to speak, I shall confine my remarks to the £10,000,000 which the Chancellor of the Exchequer expects to get from the Income Tax payers under Schedules B, D and E. I look upon this as typical class legislation of the kind of which the Chancellor of the Exchequer is particularly fond—attacking one particular class. I do not think that it is in the interests of the country, and it is not fair to these unfortunate people, most of them of the middle class, who will have to pay an extra sum in Income Tax at the most inconvenient time of the year. [An HON. MEMBER: "It is always inconvenient!"] It is always inconvenient. It is inconvenient for those who have to pay the Income Tax, whereas it is not an inconvenience for those who have no Income Tax to pay. On the let of January these particular people will have to pay extra Income Tax at a time when insurances, subscriptions to various
societies and charities, local rates, rent, motor car tax, it they are fortunate enough to have a motor car, gas, electricity and telephone bills and many other similar payments become due. These debts all accrue at the end of the year at a time when men and women who have families will have their children at home and will wish to spend a pleasant Christmas. At the end of the present year, instead of spending money on Christmas, they will have to keep it in reserve in order to pay the extra impost on the 1st of January.
This money could have been collected without any inconvenience to anybody had the Chancellor of the Exchequer not been so pigheaded—[Interruption]—and had suggested a tariff. Scottish people are called pigheaded, but Yorkshire people beat us hollow. Even if the right hon. Gentleman was not willing to adopt some sort of tariff or safeguarding Measures, I see no reason why the £10,000,000 should not have been collected from that great mass of people who pay no Income Tax. If the £10,000,000 were divided among them it would mean very little out of their individual pockets, whereas the unfortunate people who are assessed under Schedules B, D and E are already very much overtaxed. Many of them are small shopkeepers, professional people and widows who can ill afford even the taxation which they have to pay at the present time, and this last blow will be very severe. I look forward with regret to the discomfort which will accrue to them owing to this extra tax. We have to remember that when once this has been done it cannot be undone. No succeeding Chancellor of the Exchequer will be able to right this wrong. There are many other points of the Budget with which I disagree. I certainly disagree with the last speaker, who said that on the whole the country approved of the Budget. I do not think that they do, and certainly the more they understand it the less will they approve of it.

Sir BASIL PETO: Owing to the growing habit of hon. Members opposite of leaving the House the moment they have delivered their speeches, I shall not trouble the Committee with any references to the last speech from the benches opposite. I bad hoped to say something in regard to the views that were put for-
ward by the hon. Member for East Hull (Mr. Muff). That habit reduces this House to a mere sounding board for delivering a certain number of speeches for consumption in the constituency. Much as I regret that tendency, it has had the advantage this evening of shortening any remarks with which I shall trouble the Committee. I want to refer to one main consideration underlying the Budget. When any legislation is introduced during the present time of crisis, we consider, first and foremost, how the proposed legislation will affect the problem of unemployment, and when we have to deal with the annual Budget that is still more the case. How is this Budget likely to affect the question of unemployment? The right hon. Member for Darwen. (Sir H. Samuel) referred to unemployment. From those benches it seems to be an adequate answer to any consideration of that side of the problem to look at the United States of America. The hon. Member for East Birkenhead (Mr. White) carried the argument further and said: "Look at France, the latest country to have an unemployment problem." He said that there are 1,250,000 unemployed there. I should have thought that was an argument exactly the other way from that which the hon. Member sought to put it. France being the last country to feel the cold blast of the economic blizzard, it would argue that their economic policy must be somewhat better than ours, seeing that we have suffered from unemployment for over 10 years.
We shall never arrive at any conclusion as to the way to deal with this problem and how it is connected with our national finance until we realise that unemployment in this country is not one problem but two, and that there is not one body of unemployed but two bodies, one of over 1,000,000, which we have had with us for over 10 years, and the other an addition of 1,500,000, due to a large extent, not altogether, to economic questions which are world wide. Viewing the matter from that point of view, what are the reasons for this unemployment? Obviously, if you have two problems you cannot have one reason. The addition to our unemployed of 1,500,000 is due to world causes and in regard to that hon. Members opposite always say that we have to consider a reason which is common to us and the United states of
America, namely, the collapse of commodity prices, generally known as the slump. While that may be true of the addition that has taken place to our unemployment, and while that may be applicable to the 1,280,000 people who have become unemployed and have made a new problem in France, it cannot possibly account for the million people who have been unemployed in this country for eight, nine or 10 years.
Therefore, when we deal with the question of how national finance will affect that problem, we have two totally different considerations to bear in mind. We have our permanent unemployment, which is a problem peculiar to Great Britain and common to no other country. We can find the cause of that unemployment in the economic policy in which we have persisted of leaving our markets exposed to the competition of other countries. As regards the 1,500,000, other considerations must be borne in mind, but the Government in this Budget have not attempted to deal with either nor have they indicated that they realise the magnitude and nature of the problem. With regard to this block of unemployed, 1,500,000, the hon. Member for Aberdeen East (Mr. Boothby) yesterday mentioned the shortage and maldistribution of gold throughout the world, and suggested a problem which certainly deserves the consideration of the Government. I am not a deep student of the question of the gold standard, but anyone coming down to this planet from outside and seeing our great industrial organisation and what we require for the production of food and industrial commodities would say, what a strange race is inhabiting this planet when a large part of its endeavour is devoted to a search for a metal which has no utility in industry except a purely artificial one, but upon which they regulate the whole of their exchanges and the whole of their industrial organisation, whether there have been recent discoveries of the mineral or not.
I would remind the President of the Board of Trade, though perhaps he will not agree with my deductions, that it was the discovery of gold in 1848 and 1851 which made possible the great period of prosperity which people of his persuasion usually attribute to the adoption of a Free Trade policy. Again, the discovery
of gold in the Rand at the end of the last century gave us a period of about 20 years of comparatively stable prices in world commodities, and one of our main troubles at the present moment is that search haw we will we have failed to locate any great reserves of this precious metal, which we choose to regard as absolutely essential to the stability of international exchange. We have made great economies in the use of it. We no longer use it as the currency medium of the country; and one of the problems which the Government should consider is that if we are still to regard gold as the basis of exchange how we can further economise in the use of what is an inadequate medium for the great exchange of commodities throughout the world. It is from that paint of view that the Budget fails utterly. It fails to envisage the unemployment problem as it is because it regards it as a whole. When the right hon. Member for Darwen (Sir H. Samuel) and the right hon. Member for North Cornwall (Sir D. Maclean) utter the words "the United States of America," and get cheers from hon. Members because they have made a platform point, it is not good enough for the House of Commons. We want real hard thinking on this problem, and the first thing is to realise that it is not one problem but two.
There are two features in this Budget to which I must refer, and I can assure the Chancellor of the Exchequer that he is not going to get commendation from me on these proposals. I regard these features as more inexcusable, more unjust and more dishonest, than any in the Budget. The first is the collection from a limited section of Income Tax payers, generally referred to as the farmers and professional classes, but which includes a much larger class which has not been mentioned before, the small business people of the country who are earning their income by small businesses of all kinds, small builders and shopkeepers, who have to pay their Income Tax by two annual payments. It is not deducted at the source. To charge these people, as the Budget does, with Income Tax for this financial year at the rate of 5s. 7½d. in the £, while those who get their income from dividends deducted at the source are charged 4s. 6d., is one of the most unjust, unreasonable and unjustifiable proposals I have ever heard.
Why has the Chancellor of the Exchequer done this? From his point of view it is a clever proposal. He is putting this extra impost on a limited section of the community, of which nine out of every 10 would vote against him in any case, whether he treated them fairly or unfairly. In the second place, they are a limited body of voters. It is purely political considerations of this kind that has led him to adopt this proposal. On Monday the Chancellor of the Exchequer said:
I now propose that they should pay three-fourths on 1st January, 1932, and one-quarter on 1st July, 1932."—[OFFICIAL REPORT, 27th April, 1931; col. 1406, Vol. 251.]
That sounds very fair, but what really happens is this. We are dealing with the financial year which commences in April and ends in April next year, and these people are being asked to pay one-half of their Income Tax on the 1st July next and another three-quarters of their Income Tax on the 1st January in the present financial year, thus paying Income Tax and a quarter. I take the next words of the Chancellor of the Exchequer:
It is estimated that the gain on this year will be £10,000,000."—[OFFICIAL REPORT, 27th April, 1931; col. 1406, Vol. 251.]
Where is that £10,000,000 coming from? Someone is going to pay it, and who is going to pay it if it is not the people on whom this extra charge is placed? It is, of course, coming out of the pockets of Income Tax payers who can least afford it, and at a time of the year when they can least afford it. Then there is the question of the Dollar Exchange. The history of this fund has not been made quite clear to the Committee. I speak from memory and subject to correction, but I think it originated in 1915 when Mr. McKenna made an appeal to the country to provide him with all the dollar securities they held. I handed mine over. We were all given an option. We were asked to take War Loan, but we were told that if we insisted we could have cash. Very few people, I imagine, insisted. I took War Loan, quite a considerable lot, but that does not matter. [HON. MEMBERS: "Hear, hear!"] Hon. Members may say "Hear, hear." That has nothing to do with the argument. What matters is that when
I, with the rest of the community, handed over these dollar securities, War Loan, in the main, was given in exchange. That meant that an addition of that amount was made to the War debt of the country, and it is there now in the National Debt.
That was the original fund which has suffered, as the Chancellor of the Exchequer said, a diminution from £56,000,000 to £33,000,000. That £33,000,000 remains, and it came from the community who were willing to hand over to the Government their dollar securities. With it they created this fund in the United States. I ask any hon. Member who is familiar with these affairs if any business company, with a great debit capital item on the one side of the account and a credit capital item on the other aide, attempted to deal with this question as the Chancellor of the Exchequer is going to do, what would be thought of the finance of that company? If he is going to take out £20,000,000 of credit which is represented by a similar £20,000,000 of debit on the other side in the National Debt, which was actually paid in exchange for it to the nationals of this country, can it be said that that is going to cancel out a similar amount of our War debt or should be used for current expenditure?
This item of the Budget is one which I consider dishonest. There is no other word I can use for it. It is not only unsound finance, but absolutely dishonest finance, and a specimen of finance which comes very ill for the Government to show the country as the method by which they manage the national finance. There are many other features of the Budget I should like to have dealt with, but us time is short, I have dealt with only these two. One of them is an absolutely unjust proposal which is put before the House with the false argument that it is not a charge on income, as the Chancellor has attempted to make out, whereas it is a direct charge and an increase in Income Tax of 25 per cent. for this year on a limited number of taxpayers. That is utterly unjust. The other feature of the Budget is this utilisation of what is a capital credit belonging to the nation, so as to try to balance a Budget which, even with this amount, the Chancellor has been utterly unable to balance.

Mr. HORE-BELISHA: I would like to join with others in rejoicing that the Chancellor of the Exchequer has been restored to us unimpaired in health, and, apparently, re-fortified and re-invigorated. The right hon. Gentleman has taught the House many lessons, not the least important among them that criticism may be none the less genuine because it is severe. Had the right hon. Gentleman found it possible to be present, I venture to assume he would be the first to be astonished at the calmness of the atmosphere in this place, in view of the fact that elsewhere it would appear there is an economic blizzard. I have watched the right hon. Gentleman over a series of years making his merciless diagnoses of Conservative Budgets and not hesitating to put the probe into the most sensitive parts. But criticism is one thing, and practice is another. The right hon. Gentleman has now had his great opportunity. Opportunity is the friend of the famous, excluding as it does the Pharisee and rejecting the claims of those who set a higher standard than that which they are prepared to observe themselves.
My hon. Friend the Member for Bodmin (Mr. Foot) has demonstrated by speeches in this House on many occasions how much he owes to the inspiration of the great statesmen of the past. Recently, when I was privileged to stay with him, he took down from his bookshelves some volumes of Burke, and declaimed to me with an appropriate modulation of voice, and the most convincing gestures, some of the sentiments of his master. If I were to learn anything from that privilege it would be, that a politician must go to great authority. My youth has precluded me from having so deep an acquaintance with such remote statesmen. When I wanted to know the principles by which I should judge a Budget, I went to the more modern persons. I took down the volumes of the OFFICIAL REPORT that are supplied to us free of cost, because we are Members of this House and are, therefore, supposed to study them. I turned to the speeches of the right hon. Gentleman the Chancellor of the Exchequer in order to find the specific for forming an opinion. I detected among them many great principles, and one principle was that, no matter how grave the crisis with which
a Chancellor of the Exchequer may be confronted, he should never depart from his convictions. Whether that crisis be a general strike or a general blizzard, he should hold firm.
Therefore, I find myself in this dilemma. When it comes to voting upon the details of this Measure, am I to allow myself to be persuaded by the arguments that the right hon. Gentleman has used on previous occasions, or am I to support his actions which depart from them so freely? One of the axioms that the right hon. Gentleman laid down was that no capital sums should be used for the purpose of current expenditure. He described such a proceeding as immoral. And yet by some lapse or some forgetfulness he appears to have fallen into that error. I supplied myself liberally, in the year 1928, with taxed handkerchiefs in order to mop up the tears which the right hon. Gentleman bid me shed out of pity for the victims of Schedule A. What is the difference between the victims of Schedule A and the victims of Schedules D and E, except that the latter are more numerous, and that whereas the right hon. Member for Epping (Mr. Churchill) ventured to attack only the execrated landlords, it has been left to the present Chancellor of the Exchequer to apply his excruciating torture to those who are so misguided as to derive their incomes from trade and industry.
Does not the Committee recall also the language in which the right hon. Gentleman anathematised the Petrol Duty? He told us that it would encumber every branch of commerce in the land, that its incidence would fall with particular velocity upon the poor and the defenceless, and that it contained every one of the vices of an indirect tax. Well, the right hon. Gentleman recited the day before yesterday the Free Trade creed, the only creed apparently left to him to recite. He told us that on Free Trade he stood firm. Yet he was increasing the Petrol Duty—it had not encumbered industry sufficiently or weighed with enough weight on the poor. This great Free Trader, so universally lauded, increases the impost which has all the vices of indirect taxation and has not to commend it even those advantages which Protectionists claim for the policy of placing imposts, if indirect, upon a commodity which is produced in some great measure
within the United Kingdom. Where is the consistency of the right hon. Gentleman, who said that the Petrol Duty, using a phrase which he had since employed more menacingly, was the last straw upon industry? A Petrol Tax of 4d. was the last straw. How can the camel which cannot bear 4d. bear 6d., except on the assumption that the weight of four black pennies is heavier than the weight of a deft sixpence?
On all these matters the right hon. Gentleman lectured us and laid down the principles by which future Chancellors of the Exchequer are to be judged. He complained of all these items in the Budgets of his predecessors. He offered the poisoned food to us; and the Committee lapped it up, apparently with gratitude, or, as, the City described it—the City is a great friend of the Chancellor of the Exchequer—"with relief." "But," says the Chancellor, "if I do not give poisoned food, what is there to offer?" Does not the right hon. Gentleman remember his denunciation of the De-rating Act, how he told us on an antecedent Budget that the poor householder and the petty shopkeeper were being taxed in order to put millions of pounds into the luxury industries, such as gramophones, chemicals and breweries? In the excess of his indignation the Chancellor, using a metaphor that I agree is hardly suitable to one of his austere character, offered the right hon. Member for Epping what he called a tip—he would get the money back that was being squandered out of the resources of the poor and of the retail merchants. The test of the tipster is that he backs the horses which he advises others to back. The right hon. Gentleman has left the course before the decision of the race.
No, the scales with which the right hon. Gentleman weighed his predecessor have been found wanting. That reminds me again that my hon. Friend the Member for Bodmin not only has a library of books, but a fund of stories to suit every occasion. My hon. Friend told me recently of an episode of 80 years ago, in the small village of St. Germans, in Cornwall. In that village there was a small Methodist community that desired to build itself a chapel, but all the land was owned by the Earl of St. Germans, who lived at Port Eliot. The leader of these Methodists was one Geake, a
butcher, and he supplied Port Eliot with meat. The butler of the Earl of St. Germans came to the butcher and said, "On the meat which you supply to the Noble Lord's household you must give me a commission." "Not so," said the butcher, "I am an honest man." In the fullness of time the noble lord sent for Geake, the butcher, and said, "Here are the weights of the meat for which you have charged me, and here are the weights which you have delivered, I have taken great pains to test the accuracy of your accounts, and I find that you have defrauded me." Geake said, "There must be something wrong!" "Indeed," said the noble lord, "you are that something which is wrong. You shall no longer supply me with meat." The crestfallen butcher returned to his shop, and the news spread that he was a fraudulent trader. Someone hurled a stone through his shop window, and others hurled stones through the windows of his house; and he was ruined.
But in the middle of the night Mrs. Geake said, "I wonder if there is anything wrong with the noble lord's scales?" Geake, as if he had received a revelation jumped up, proceeded to Port Eliot, and asked to see Lord St. Germans. With same difficulty he was given access to the Earl. "Will you allow me to test your scales?" says the butcher. "That is a just request," replied the noble lord, and he put his scales upon a cart and fetched the scales of the butcher, and they were taken to Liskeard; and the Inspector of Weights and Measures, having applied the test, said, "There is something wrong with the scales of the noble lord. Someone has tricked them." The noble lord sent for his cook. The conk was gone. He sent for his butler, and the butler had departed. He sent for Geake and said, "What reparation can I make to you?" Geake replied, "You can give me a piece of land on which to build a chapel." The noble lord took the butcher arm in arm, and said, "Take what land you like."
Well, the scales of the Chancellor of the Exchequer, in which he judged his predecessor, have been found to be faulty. He accused his predecessor of giving wrong measure and inaccurate weight, but it is his own scales which are wrong. What reparation is the Chancellor of the Exchequer going to
make to his forerunner? Perhaps the Budget which he has introduced is the best reparation he could make. So much for what is in the Budget of the right hon. Gentleman. But there are omissions. It has brought relief, we are told, to the City. What has it brought to the unemployed? They were not found deserving of honourable mention in the speech of the Chancellor of the Exchequer. Not only does the right hon. Gentleman omit from the balance-sheet the debt due on the Unemployment Insurance Fund, but no reference whatever is made to the greatest debit of the nation at this moment. Yet I remember when the right hon. Gentleman and the Prime Minister criticised the Budgets of the right hon. Gentleman the Member for Epping. Then, they recalled that in the forties of the last century, as a result of the industrial revolution, money was borrowed, and railways, docks and harbours were built, which not only gave temporary relief, as they reminded us, to the unemployed, but permanently created new industries.
We are in the throes of another industrial revolution to-day. Either you must distribute leisure better or you must distribute work better. [HON. MEMBERS: "Wealth."] The right hon. Gentleman was elected to this House to distribute wealth better, and, whether we agree with him or not, it will be agreed that the test of a great statesman is that he espouses some great cause and sticks to it through thick and thin. If he ceases to believe in it or finds it impossible of fulfilment, then under the traditions of our Constitution, it is his duty to make way for another. You cannot make the best of all worlds under this Parliament. There are those who believe one thing, and those who believe another. What shall we say of those who have been elected to Parliament to do one thing, and then carry out so slavishly the policy of the opponents whom they have attacked? The right hon. Gentleman said that his Budget would be a landmark in the history of Budgets. Posterity allows no one to stake out a claim in advance. It knows nothing of squatters. Posterity will judge, but this the right hon. Gentleman's contemporaries can judge—that it is a landmark in his own career. He promised the people of Plymouth when he spoke there in the year
1928, to raise £250,000,000 worth of revenue—he said he could do it easily—to readjust the inequalities of wealth. The right hon. Gentleman up to this moment has had a consistent career. The aspirations of the people have been centred in him. They have made him what he is. It is a landmark in the right hon. Gentleman's career that now, having the opportunity, he who might have won a warm place in the hearts of the masses, prefers a cold niche in the halls of the City of London.

Sir ROBERT HORNE: I feel some embarrassment in rising to speak at this stage of the Debate, when everything that can be said about this Budget has already been said, in much better language than I can command—particularly by the last speaker—but there have been two prominent features in the proceedings of the last three days to which I would allude. One is a sentimental matter, namely, the demonstration which we have seen of the affectionate regard in which the Chancellor of the Exchequer is held in every part of the House—a feeling which perhaps we did not all realise until we knew that he was suffering. That stage of his illness happily is over, and we are now, I imagine, permitted to use our feeble efforts in hitting back at him as shrewdly as he hits at us. The other distinguishing feature of these proceedings is the complete metamorphosis which has been exhibited by the Chancellor of the Exchequer. The stern, unbending, rigid, financial purist has displayed the qualifications of the speculator, with an added touch of the rake. There is a very old Latin tag,
Corruptio optimi pessima.
which may be freely, yet accurately, translated as meaning that when a righteous man takes to going to the dogs, he goes faster and further than any ordinary person. Indeed, the Chancellor of the Exchequer made a most unexpected speech when he introduced his Budget. He has destroyed every principle upon which he previously stood, except one, and that the only one which was not worth preserving. He has introduced a Budget in which he has palpably underestimated expenditure and has equally obviously over-stated his possible revenue. He takes capital in order to defray current charges which ought to be met out of revenue. He pays off Debt
with one hand while he borrows with the other, and, finally, in attempting to meet charges which certainly are not transitory, he only makes a provision which will be exhausted by the mere process of the effluxion of time during the current year.
I shall venture, as briefly as I can, to make good each of the heads of the indictment which I have laid against the Chancellor of the Exchequer, but, by way of preliminary, may I say this. It will no doubt be urged against us, as it has been urged against others, that we are exhibiting a gloomy picture to the world and that at a time such as the present, that is somewhat unpatriotic. If I could believe that any good purpose would be served by silently accepting the plausible account which the Chancellor of the Exchequer has given of the nation's finances, I should be the last to break into any utterance, but I am convinced that that is the wrong course to follow at the present time. To begin with, those whose view of our credit is of importance in the world, are not in any way deceived by the account which the Chancellor of the Exchequer has given, and their contempt for us will only increase and their distrust of us be magnified if we show that we are foolish enough to be taken in by what has been presented to us in the shape of this Budget. Again, with regard to the people of this country, there is nothing to be achieved by lulling them into a fool's paradise. It is necessary that the people should be fully informed, and accurately, of the condition of the country's finances; otherwise, it will be quite impossible to get from them that effort which is urgently necessary if this country is ever to regain its lost prosperity.
With these preliminary remarks, let me devote myself for a moment to the Budget. I do not think anything startled most of the Members of this Committee so much as the optimistic estimate which the Chancellor of the Exchequer put before the Committee with regard to the revenue which he expects to obtain in the course of the year. The Controller of Finance at the Treasury said, only a very few weeks ago, that the revenue of 1931 must fail, and yet the Chancellor's estimate only shows a failure in the revenue of £1,250,000 all told. How does he come
to that result? He estimates a large increase in the Surtax, in spite of the fact that the Surtax is now going to be charged, so far as this year is concerned, upon a year which proved disastrous in regard to Income Tax. With regard to Stamp Duties, he makes an estimate that I cannot find anybody in the City of London to agree with. Everybody knows that these things depend upon the state of trade, and at the present time there is nothing in the City of London to justify the idea that you will have any large increase of Stamp Duties, or indeed that you will not have a decrease.
Then, in regard to Estate Duties, the Chancellor of the Exchequer has means of estimating these things which are not open to the rest of us, but it seems to me to be fantastic that, at a time when the people who are going to die in the course of this year have in their portfolios securities which are at a lower ebb than they have ever been in our experience, these should be capable of yielding an increase of £8,000,000 in the present year. This estimate looks to me to partake of a degree of optimism which I am afraid will not, in the course of the year, be found to be justified.
I get equally little comfort when I turn to the expenditure which the Chancellor of the Exchequer expects during the year. The margin which he leaves for himself is only £134,000 all told. I do not know whether there has ever been presented to the Committee of Ways and Means in this House so small a balance of revenue over expenditure, but at any rate it obviously puts upon us the duty of scrutinising with very special care what the expenditure consists of. The very first item that attracts my attention is one in which £30,000,000 only is allotted to the expenditure on transitional benefit under unemployment insurance. There immediately comes to my mind the statement made by the Controller of Finance to the Unemployment Insurance Commission, in which he stated that transitional benefit in 1931, it was estimated, would cost £35,000,000 to £40,000,000 or even more, and yet the item in these accounts is put at the figure of £30,000,000.
I have been puzzled to account for this, and I can only come to this conclusion, that under the present scheme transi-
tional benefit begins to run off from September this year, and by September of next year all those who have been enjoying transitional benefit will be deprived of what they have been getting; and it may be that the estimate is placed at £30,000,000 on the basis that people who at present are drawing benefit will begin to go off the scheme in September. But does anybody imagine that these people are to be left derelict and that no provision is to be found by the Exchequer for them? If that provision cannot be made under transitional benefit, at least it ought to have found its way into some other part of the Exchequer account, and, if we are proceeding on the basis that nothing is to be found for these people, obviously we are in for one of those things which the right hon. Gentleman the Member for Darwen (Sir H. Samuel) so much deprecated to-day—a Supplementary Estimate, which may run into a very considerable sum.
10.0 p.m.
But all this optimistic view of expenditure is based upon the chance of better times. It is based also upon the hope that the Committee which has been set up to inquire into expenditure will find some means of reducing the cost which the nation is incurring for this year. I had some acquaintance with a committee of a similar character, and it was my good luck to be able, with the very powerful assistance of my right hon. Friend the Member for Carnarvon Boroughs (Mr. Lloyd George), who was then Prime Minister, to achieve a pretty considerable reduction in expenditure. But of course that was at a time when we were not so near the bone as we are now, and, while I think that something may be achieved in the way of cutting off something from administration expenses, there is going to be no reduction of any moment achieved unless by cutting down some of the Government policies, and I do not see very much prospect of the committee which has been set up being able to induce the Government to do that.
Accordingly I do not look for much from the activities of this committee, and no more does the Chancellor of the Exchequer. I never heard so much derision poured upon a scheme, especially one from the Liberal benches, as upon the occasion when he made his acrid,
acid comments on the proposal that he should accept this committee; and in the end what he virtually said, after stating that he himself could at that moment write the report—indicating that he had done everything which was already possible—was that he went on—[An HON. MEMBER: "You voted for it."] Certainly. I think something could be achieved, but nothing like what the Chancellor of the Exchequer now says can be achieved to meet possible increases of expenditure. In the end, what it came to was this, that some sop had to be thrown to the Liberal party, and he was not unwilling for them to have that. It is quite clear that very little is going to be obtained, in the Chancellor's own view, from the exertions of that committee.
What is the other relief that he expects? He looks forward to the possibilities of some conversion scheme which will reduce the amount of interest due upon our Debt. But no conversion scheme is possible in this country so long as we go on spending money at the rate at which we are spending it to-day. Every conversion scheme depends upon economies and doing something to pay off a large portion of our Debt. Without these economies, it will be impossible to bring forward any conversion at all, and what are we doing now in the way of economy? During the last year we spent £51,000,000 more than we had spent the year before, and there is an addition again this year of another £8,000,000 or £9,000,000. To-day we are in a position, if these estimates are warranted, of spending £100,000,000 in the year more than we were spending in 1924. In such circumstances, it is impossible that any conversion scheme can be brought forward. Nobody is going to find it possible to obtain money to create such a conversion, because so long as the country is burdened with expenditure of that kind it is quite impossible for the money to be found for conversion.
I turn now to my next point in the Chancellor's Budget. As the Committee will remember, last year he instituted a system for paying off automatically any deficit that had occurred in the previous year, and £23,500,000 is the deficit which he found upon his last Budget. We knew that there was a considerable sum lying in America which might be set free for
some of the purposes of the Budget at the present time, and an interesting difference of opinion took place between a right hon. Friend who sits near me and myself. I said that I was perfectly certain upon the Chancellor's record that he could not do anything else with this money than devote it to the paying off of that Debt. My right hon. Friend took the other view, and said: "I tell you he will use it for dealing with current expenditure." I said that he could not do that with his principles, and he said, "Anyway he will," and he turned out to be right. Now the Chancellor of the Exchequer will have to have a special Clause put into the Finance Bill, to annul the obligations which he imposed upon himself and disrobe himself of the virtuous cloak which he assumed.
The most serious element of this Budget, as I see it, arises upon the amount of money that is owing by the Unemployment Insurance Fund. The Chancellor presented to the Committee and to the country an account of our State finance at the present time which was entirely fallacious. He said that last year we had really achieved a surplus of £43,500,000. That statement was entirely incorrect. He had borrowed £36,500,000 to pay the Unemployment Insurance Fund in order to meet the claims of the unemployed. Nobody ever expects that money to be repaid. Is there anybody present in this Committee who thinks that the Fund will ever be able to pay that money back to the Exchequer? Accordingly, that sum which he has borrowed for the purpose that I have described ought to have entered into his accounts. The Controller of Finance had no doubt about that in giving his evidence before the Unemployment Insurance Commission. He said then,
It, in substance, obliterates the Sinking Fund.
That is to say, he pointed out what was made very clear this evening by my right hon. Friend the Member for Seven-oaks (Sir H. Young), that, in effect, there was practically nothing paid to the Sinking Fund last year. It amounted to the beggarly sum of £7,000,000, while the Chancellor prided himself on devoting £43,500,000 to that purpose. A matter of this kind is serious. I venture to say that no auditor could be found in this
country who would have certified a balance-sheet, upon the facts that we now know, such as the Chancellor of the Exchequer presented on Monday. He would be bound to draw attention to the fact that this borrowed sum ought to be put into the accounts as a debit, and he would be bound also to point to the fact that these borrowings were carried on at £1,000,000 a week, and that in the course of the present year,, before the present account was finished, we should be due for a further sum of £40,000,000 to £50,000,000. That would have put an entirely different face on the Budget as presented by the Chancellor of the Exchequer. I make no apology for reading again to the Committee of Ways and Means the words which were used by the controller of finance upon this question because it is important that the country should thoroughly understand where we are going in this process of keeping this account. He said:
These vast Treasury loans are coming to represent, in effect, State borrowings to relieve current State obligations at the expense of the future, and this is the ordinary and well recognised sign of an unbalanced Budget.
We have sufficient examples in the world in recent times—

Mr. MAXTON: That did not commence this year. The idea of loans for meeting the charges made upon the Insurance Fund is not new.

Sir R. HORNE: I am obliged to my hon. Friend for reminding me of that point, because the great difference is this, that whereas previously these borrowings were within very narrow margins, which it was possible for the Unemployment Insurance Fund to pay back, they have now reached dimensions which everybody recognises make it impossible for repayment ever to be made. That is the very point which was made by the representatives of the Treasury to the Unemployment Insurance Commission. A fund which now owes £72,000,000, and is steadily borrowing at the rate of £1,000,000 a week, can never be expected to recoup the Treasury in that money.

Mr. MAXTON: The whole burden of the talk for economy is economy on the unemployed, and I want to ask why it was necessary for the Controller of Finance, an official holding a responsible position in the Civil Service, first to
point this out to a Royal Commission instead of pointing it out to the Chancellor of the Exchequer in previous Governments?

Sir R. HORNE: It has always been kept quite clearly before previous Governments, but there is all the difference between a solvent debtor and an insolvent debtor. What you have now is an insolvent debtor. We have no hope of this money being repaid, and it is necessary that our accounts should so state it. I pass from that very important matter to the last of the counts that I have made, and it is to the effect that the Chancellor of the Exchequer, while having definite obligations in front of him, is making a provision which will meet them for only one year, by sums which can never recur. What is the situation? The expenditure which he is meeting this year is expenditure which he must expect to recur next year, and for many years afterwards. Although it is an old maxim in the management of the finances of this country that you must always, in making your provision, at least be able to look forward two years, what the right hon. Gentleman does is to provide a sum of £30,000,000 from two funds which are completely exhausted by what he does. Accordingly, no provision is envisaged at all for next year to meet that expenditure which he must necessarily expect. That is bad finance. In the second place, half of the sum which he takes is capital which he derives from the fund which has been lying in America, and which he devotes—a thing which he has hitherto condemned—to meet current expenditure. [Interruption.]

The CHAIRMAN: Hon. Gentlemen who are trying to check interruptions are just as bad as those who are interrupting.

Sir R. HORNE: I am not saying anything that is provocative. I am doing my best to explain the financial problem as I see it. What I am now endeavouring to show is that, so far as this capital expenditure is concerned, it is greatly aggravated by what we are doing in other directions. This year, for example, the estimate for Estate Duties is put at £90,000,000. That is capital, and it is quite proper to use it for the reduction of Debt, but only £52,000,000 is being
devoted to the reduction of Debt, so that this year alone £40,000,000 of the country's capital is being used for our ordinary current liabilities. More than that, if we look back over a period of years we shall find that while we have raised £508,000,000 from Estate Duties in the last eight years the nominal amount of our Debt has come down by only £172,000,000. More than £200,000,000 of capital has been applied in that short space of time to meeting ordinary current liabilities. If any business in this country were conducted on that basis it would not last very long. The fact that we are a rich country, with piled up resources, no doubt enables us to meet these obligations over a longer period than could other countries—for example, Australia, a young country with few resources; but the day of reckoning will come, and Nemesis awaits this attack upon the capital resources of this country; it destroys the very funds which are necessary for the purpose of supplying the industrial population of our country with employment.
The question has been asked from time to time in these Debates: "What are you prepared to do? What would be your way of dealing with this problem?" I do not think there is any difficulty about knowing what one should do in the present circumstances of the world. It would be easy. Instead of resorting to all the shifts that the Chancellor has adopted, it would be easy, by the use of a tariff, as is done by every other country, to raise the necessary funds. I am glad to think that that is a device which has been increasingly recognised in this country in recent years. Some of the most ardent opponents of such a system have now become convinced of its absolute necessity. Very notable names in all parties can be adduced in support of it. The old shibboleths to which we have been accustomed do not apply to the present position. The Chancellor of the Exchequer put forward the objection that this was a method for reducing wages. I venture to say that there is no other way by which wages and the standard of living in this country can be kept up. I ask hon. Members opposite, "How will it be possible for us to sustain competition in the making of our goods against people whose hours
of work are longer and whose standard of wages is lower than is the case in our own country?" Obviously, competition cannot be maintained upon those lines.
If we inquire in any country where the standard of wages is higher than in our own we shall find that the workmen there would never hear of lowering the tariff, because they realise that it provides the only way of defending their wage scale against our cheaper wages. Ask the question of men in the trade unions of America, or in the great labour organisations of Canada, or the labour people of Australia, and they will tell you at once that they are not going to open their market to our goods, made under cheaper conditions and lower rates of wages. So far from a tariff being a method of lowering wages, it is the only method by which the wage scale can be sustained. Another argument advanced by the Chancellor of the Exchequer caused me surprise. It was the old dilemma that you cannot have the benefits of Protection and at the same time raise a revenue. We have had some experience in this matter; we have been living under certain import duties. Let me remind the Committee of the Safeguarding Duties, of the Key Industry Duties and of the McKenna Duties. Do we derive revenue from them? Look at the accounts, and it will be found that we got £12,500,000 out of those duties last year. Are they Protectionist? If they are not, what is your objection to them?
It is perfectly obvious that those are admirable illustrations of what can be done by such a system. What do manufacturers in our country do when a tariff is put up against them in another country? They cut their prices as low as possible in order to get into that market. Some of them cut their prices low enough to get in at considerable sacrifice, but others are unable to do so. Those who do go in pay the tariff, and those who do not go in are kept out of the market. Accordingly, the country which puts on the tariff gets the revenue from those who come in. On the other hand, there is protection by reason of the fact that many are kept out. This system is universal throughout the world now, and it appears to be understood by the people in every country except our own.
The whole of this dispute has really become farcical. I have looked up a list of the revenues that we get in this country from import duties. I find that the second highest result achieved by import duties is in the case of sugar. We get £12,000,000 a year out of import duties on sugar. Where are the food taxers? I listened to the speech of the Financial Secretary last night, and he told the House that sugar was the next most important article of food in this country to bread, and yet we are told that we must not tax lace, we must not tax buttons, and we must not tax cutlery, but we must tax she people's food in the shape of sugar. Free Traders used to give us this answer: "Ah, yes, but we are still faithful to the principles of Free Trade, because we put an Excise Duty upon anybody who produces sugar in this country!" What are we doing to-day? We have reduced the Excise Duty in order to encourage the growing of sugar in this country. We derive a revenue from the Sugar Duties, but at the same time we afford a considerable amount of protection to those who grow sugar in our own country. We have put a duty on petrol, but do we put an Excise Duty on those who produce petrol in Scotland? Not at all. You leave them entirely free of the Excise Duty, and consequently the duty on petrol is a protectionist duty.
It is fantastic to say that we are still adhering in this country to the doctrine of Free Trade. The Liberals are in a worse case than anybody, because every project they have advanced in regard to the solution of the unemployment problem involves this doctrine: "We do not allow competition between foreign goods and those we are using in the development of unemployment schemes." If bad times and depressing times are such that we must throw over Free Trade, it is perfectly obvious that we have arrived at a condition of things in which our best chance of creating employment in this country is to take means by which we can protect our own industries. The whole matter has now gone beyond controversy. Mr. Keynes is a very distinguished economist, and is of great importance in the Liberal party. He was the man, if I remember aright, who helped the Leader of the Liberal party to concoct the pamphlet upon "How to Conquer Unemployment." There is another
adviser who is very influential in the Liberal party, namely, Sir Josiah Stamp. Both of these distinguished economists have entirely departed from the theories which the Liberal party alone are advancing in all their obfuscated antiquity in this House. I remember Mr. Keynes long ago writing a book in which he said that the Leader of the Liberal party had succeeded in bamboozling a certain statesman, but that he could not de-bamboozle him. I do not know whether Mr. Keynes himself has been bamboozled in his talks with the Leader of the Liberal party over unemployment, but he has certainly succeeded in de-bamboozling himself. If I may take up two or three more minutes, I should like to quote his exact words. He says:
An advocate of expansion in the interests of domestic employment has cause, therefore, to think twice.
The expansion was, "How to Conquer Unemployment." He proceeds:—
I have thought twice, and the following are my conclusions. I am of opinion that a policy of expansion, though desirable is not safe or practicable to-day unless it is accompanied by other measures which would neutralise its dangers. The main decision which seems to me to be absolutely forced on any wise Chancellor of the Exchequer, whatever his beliefs about Protection, is the introduction of a substantial revenue tariff. It is certain that there is no other measure all the immediate consequences of which will be favourable and appropriate.
Can we hope that for once the Liberal party might think twice and come to a correct conclusion? We have heard today from leading representatives of the Liberal party that they are anxious about economy, and that they are going to take care to see that Supplementary Estimates are not passed by the House. But can we trust them? My greatest desire since I have been in this Parliament has been to find myself in the same Lobby on some occasion as the right hon. Gentleman the Member for Darwen (Sir H. Samuel); but he is too agile for me. I have heard from him many brave speeches, but have never seen them carried out in the Lobby. Always, when the vote comes, the native hue of his resolution is
sicklied o'er with the pale cast,
not of thought, as the poet says, but of fright; and I am afraid that we cannot rely upon him to see that economy is observed in this House, any more than
we could trust him upon the other great matters with which he has dealt before. But, whatever be the decision of the Liberal party, it is quite certain that the country has gone far ahead of the theories which they have been accustomed to expound. I agree with Mr. Keynes that 90 per cent. of the people of this country are now convinced upon a tariff policy, and, if only the Chancellor of the Exchequer would be wise and adopt these measures at the present time, I have the greatest possible confidence that we should restore, not only courage and hope to this country, but an amount of business and industry which would entirely retrieve our lost prosperity.

The PRESIDENT of the BOARD of TRADE (Mr. William Graham): My right hon. Friend the Chancellor of the Exchequer had hoped to intervene again in this Debate, and to reply to certain points which have been raised by hon. Members in different parts of the Committee; but I think all Members, irrespective of party, will agree that it is eminently desirable that he should safeguard his health in the existing conditions, and, accordingly, he has asked me to-night to deal, not with the wide range of this Debate, but with one or two points, on the understanding that during the Committee stage of the Finance Bill he and the Financial Secretary will deal with the other details which have been raised. I should like to acknowledge on his behalf the very kindly personal references that have been made during the three days of Parliamentary discussion. It is, of course, very difficult in less than half an hour to touch on more than one or two points in this discussion. I should like first of all to notice the question that was raised by the right hon. Baronet the Member for Antrim (Sir H. O'Neill) regarding the £9,000,000 proceeds of the German Mobilisation Loan. He was in doubt as to what was meant by the use of the phrase "outside the Budget." The House will probably recall that that arose from certain arrangements that were made at the reparations settlement at The Hague, and that during 1930 there was presented to the House a White Paper which showed that that had not gone through the ordinary Budget procedure but had been paid direct to the
Commissioners of National Debt and had, in fact, been applied by them to the redemption of 5 per cent. War Loan. That was clearly stated in the Command Paper at the time and also made plain in reply which the Chancellor or the Financial Secretary to the Treasury gave at some later date.
I pass to two questions which have been raised both bearing upon Income Tax, first of all the point put by the right hon. Gentleman the Member for Darwen (Sir H. Samuel) regarding the taxation of company reserves and the other, which has been raised by many Members, regarding the accelerated collection of Income Tax under certain of the Income Tax schedules. As regards the taxation of company reserves, that, of course, is an old and familiar problem. I remember a considerable analysis of it during our proceedings in the Royal Commission on Income Tax in 1919, and I think there has been hardly a year in our recent financial Debates in which it has not been proposed in some shape or form and, I am afraid, almost uniformly resisted by successive Chancellors of the Exchequer. No one disputes the difficulty of the proposition. There is, of course, a strong prima facie case, more particularly when we are interested in schemes of industrial reorganisation, when we are pleading for industrial development and when it would appear that the use of these reserves would strengthen the competitive power of this country in the home market and in the market abroad and also stimulate the employment of larger numbers of people, and it might be plausibly argued that that would be indeed a good investment if it led to a saving in the expenditure under the Unemployment Insurance Fund.
But all Chancellors of the Exchequer have observed that there is, first of all, the difficulty of drawing a distinction between sums put to reserve in ordinary company practice and other sums put to reserve, very often for purposes of development, by private individuals or by other bodies clearly not entitled to this proposed exemption, but whose saving is on all fours with that for which this concession is sought. In the second place, it has never been denied that even on a very modest scale, such as I think would quite fail to give the stimulus which hon.
Members have in mind, any concession would involve a very large sum, and that becomes difficult and even of greater importance in a year of severe financial distress with which the Chancellor has just had to deal. But he authorises me to say to-night that he has had this question under very serious consideration for some time, and he would not be prepared to suggest that the difficulties are insurmountable. At a later stage in our Budget proceedings—while it is clear and plain that I am giving no pledge of performance on his part—he himself will refer to this proposal, and give a more complete reply.
As to the question of the accelerated collection of Income Tax under Schedules B, D and E, there is not the least doubt that there is a good deal of misapprehension on the matter. Quite apart from the precedent of the right hon. Gentleman the Member for Epping (Mr. Churchill) in accelerating the collection under Schedule A, there was at least the precedent of Mr. Gladstone in 1860. At that time it was collected, if I remember aright, by quarterly instalments, and he succeeded in getting five instalments into that financial year.

Sir H. SAMUEL: What was the rate of Income Tax?

Mr. GRAHAM: The rate of Income Tax was, no doubt, very low. Then there came in 1869, by Mr. Lowe, a re-arrangement in the tax which was based upon one collection applicable to the financial year when, I think, he also succeeded in bringing an additional quarter into that period. It is worth while remembering that from that date right up to 1915 it remained on the basis of one annual collection, and it was only in 1915 that the concession which it is now sought to modify was made and the collection was divided into two parts, one part of it at 1st January in each year, and the other part at 1st July. It will be observed, in passing, that when the right hon. Gentleman the Member for Epping made his change in Schedule A he estimated, I think, for over £14,000,000 at that time, and he actually obtained either £16,000,000 or more nearly £17,000,000, so that as regards the aggregate amount of tax collected it was at least about £7,000,000 better in practice than the
plan of my right hon. Friend, who only proposes by this accelerated collection to get an extra sum this year of approximately £10,000,000. It is also irrelevant to suggest, as was suggested in the introductory speech of the right hon. Gentleman, that this is something which is unfair and even may unjustly affect a great body of deserving taxpayers.
When the right hon. Member for Epping made the change for the acceleration of collection under Schedule A there can be not the least doubt that he attacked a very large number of people of comparatively small resources. There has been an enormous development of building society enterprise, in which we all thoroughly rejoice, in this country since the War, and the great body of small owner-occupiers were affected by that change. There is, therefore, nothing new in this proposal of the Chancellor of the Exchequer. No doubt to some extent the same people may often be affected, but as the right hon. Gentleman supported the plan on Schedule A when our predecessors were in office, I do not think that the charge can carry very much weight in existing conditions. Moreover, the Committee will observe that the Chancellor of the Exchequer is not taking away the whole of the concession. He is changing the one-half payment which is applicable to the 1st of July in each year and is collecting three-quarters of the sum due on the 1st January, leaving one-quarter to be paid on the 1st July. He is giving very ample notice of the change.
It is perfectly relevant to point out, in a year of very deep industrial and financial stress, that it is better to adopt what the Chancellor of the Exchequer frankly describes as a device, rather than raise the standard rate of Income Tax, when we bear in mind the influence of any increase in taxation on our industrial position. Moreover, when we compare the conditions of 1915 and of the present day there are certain very important points. When we come to a proper analysis of the standard rate of Income Tax in the two periods we must bear in mind that substantial concessions have been made within recent years. We have to remember the allowances which have been imported into the Income Tax system, many of them following the report of the Royal Commission on the
Income Tax in 1919. In comparing 1915 with the present day we find that on incomes up to £500 per annum a single man pays less now than he did in 1915, while on incomes up to £800 the married man pays less than he did in that year. These are relevant and perfectly fair considerations when we have to meet the charge of an attack upon any section of Income Tax payers by what is a necessary and an unavoidable withdrawal of only part of a concession which they have enjoyed during the past 15 or 16 years.
I turn to deal very briefly, because of the short time at my disposal, to two large issues which have been raised in the Debates on the Budget. They were raised particularly in the introductory speech of the right hon. Gentleman the Member for Edgbaston (Mr. Chamberlain) and certainly in the speech delivered this afternoon by the Chancellor of the Exchequer's predecessor in office. The right hon. Member for Epping is once again an isolated figure. He made it perfectly clear that he spoke for himself. Although I have very rarely troubled the House with any literary reference, I confess that one occurred to me this afternoon as I listened to the right hon. Gentleman's speech. In his volume on the life of Lord Randolph Churchill he gave us a wonderful description of the Parliament of 1880, when the Tories were in opposition, and he described the Front Opposition Bench as "being encumbered by the dreary wreckage of the late administration." I wondered whether there was any desire on his part to separate himself from colleagues to whom without offence a similar criticism might be applied in existing conditions, but, at all events, we had a spectacular performance in which the right hon. Gentleman dissociated himself from other hon. Members opposite and agreed with most of the steps which have been taken by the Chancellor of the Exchequer, and in which he also descended in the last resort upon the tariff device as an alternative to the plan in which the Government are now engaged.
More and more he comes into the open on that subject and I make no apology for devoting the main part of the remainder of my reply to a frank analysis of the situation, as I see it in our trade relations at the present time and the mass of information before us and to
the manner in which any tariff would affect industry and employment in this country. A word about a revenue tariff. What is the real object, what are the grounds upon which it is defended in existing conditions? I pay a tribute to the sincerity of those who take that view; I make no charge against them, sufficient for us is the ground upon which they base their case. They claim a desire to see an artificial rise in the price level. They look to world conditions during the last 10 years and to the collapse in commodity prices since the Autumn of 1929, and they see no immediate prospect of a rise in prices having regard to accumulated stocks and the world position in gold distribution
Quite frankly and openly they say: Here is one step, a revenue tariff, which will artificially raise the price level to some extent, give to industry and commerce, what they call, a psychological encouragement, and pave the way for an improvement in our trade.
But they associate with that claim the argument that it would be one method of dealing with our wage processes in Great Britain. They make no secret of that. Some of them have said in my hearing that they do not believe that they can make a frontal attack on wages in existing conditions. Here is a method by which, they say, the purchasing power or real wages of the workers can be reduced. They propose to get at the costs of production by that indirect route, side by side with the so-called stimulus which they think would follow from a device of that kind. That is a perfectly fair statement of the argument they employ; but they have not defended it on fundamental economic considerations. They have put it forward quite bluntly as a temporary step and something to be withdrawn later. But the Whole history of devices of that kind is that once they are fastened on the community they do not come off. In any event, it is true that it would be immediately employed for building a much larger structure of tariffism in this country, and that has been made plain in many speeches delivered this afternoon.
We on this side of the House have never felt that we should find a solution of our industrial problems either under Protec-
tion or Free Trade, but we have always said a system of fiscal freedom is a sounder policy for the industrial troubles of this country than can be enjoyed under any other method. What was the ground for the statement of the right hon. Gentleman the Member for Epping at the conclusion of his speech? I was frankly surprised that he should have taken the argument of retaliation which, speaking for myself, I have always regarded as about the worst argument that could be advanced, and the most dangerous from the point of view of a great exporting country. We do not belittle our home market for a moment, but if we make an analysis of the unemployment problem and examine the distress, we find that a large part of it is due to the falling off in the exports of coal, iron and steel, textiles, in the terrible decline in shipbuilding, which is lower than for a very long period in the history of this country, and the collapse of our shipping and many indirect services on which we depend.
How are hon. Members going to improve that situation by a tariff policy? What contribution could this make to the plight of the cotton industry at present. There is no suggestion of a tax on raw material, but a tax on imported manufactured goods. But it is beyond dispute that the moment we embark on any device of that kind, we shall be exposed to powerful retaliation in some of our most important markets. I make bold to 'say you would do less trade under those conditions than you are doing now. There is one important consideration which hon. Members constantly ignore in the tariffist arguments they use. I believe it to be true to-day that those other countries are less interested in our market than we are in theirs, and they possess very great powers of attack on our export trade.
I have heard references to iron and steel. That is a very difficult problem. No one disputes the plight of that industry under existing conditions, but we have a particular difficulty with which we are confronted. During 1929 we exported £68,000,000 worth of iron and steel goods. We imported about £25,000,000 on the other side, but a very large part of that £25,000,000 of imports were imports which were worked up in other processes in this country in leading industries of great importance. In other
words, the whole problem was one of net advantage to Great Britain. I make bold to say that if hon. Members opposite were on these benches to-night, they could not, in regard to iron and steel, deliver more than a fraction of the tariffs which they have promised under exisiting conditions. They would be confronted by a whole series of drawbacks, exemptions and concessions of almost every description, and there would be nothing like that virtual prohibition of the imports of 3,000,000 tons which have figured in some parts of the arguments of the iron and steel industry on this matter. No, there is not a remedy along that line, and, accordingly, I am proud of the fact that the Chancellor of the Exchequer has put that beyond all manner of doubt in his Budget statement.
Now one word on one of the charges made by the right hon. Gentleman the Member for Epping, addressed not only to the Rouse of Commons but to friends and colleagues on the Labour benches. The right hon. Gentleman said that this Budget marked the end of direct taxation. He said we had reached the limits, and added that it was also the end of Socialist principles or Socialist dreams in Britain. I cannot understand the economic reasoning which arrives at a conclusion of that kind. We have never placed more than a certain limited importance on the contributions which could be made through taxation in establishing what we regard as a new and better industrial world. The Chancellor of the Exchequer has said he must depend, quite frankly, upon certain emergency measures, and he has based his Budget on that principle.
But all that is quite without prejudice to the faith which my right hon. Friend has held throughout his public career. He has not made any change in his belief that, more particularly as trusts and combines develop, there must be transition through public utility and public operation to the application of Socialist principles. Even in this Parliament we had an illustration the other day in the proposals for dealing with London traffic. So it will be in any other great monopoly. The right hon. Member for Epping brings a charge which is not substantiated in any shape or form by reference to strict economic principles or great industrial changes. It is just one of the vague and
descriptive and spectacular charges which are pressed into duty in the peroration of what purported to be a powerful Parliamentary performance. From every point of view in existing conditions the Budget can be justified, and if one word of personal tribute in conclusion may be permitted—

Mr. CHAMBERLAIN: The right hon. Gentleman has not said one word about the borrowing in respect of the Unemployment Insurance Fund, a point which has been repeatedly pressed upon him from this part of the House. I think he might give us an answer.

Mr. GRAHAM: On that a full statement will be made during the later stages of our Budget proceedings. The right hon. Gentleman knows exactly the position and the controversy—the appointment of the Royal Commission, the question of what may emerge from that Commission and any action the Government may take upon it—but there is not the least doubt that a statement will be made during our later proceedings. I am confining myself strictly to the points that the Chancellor had in mind. I would end upon this note: I think in all seriousness that the Chancellor of the Exchequer has taken the proper line, certainly from the point of view of trade and industry, in framing his Budget on emergency principles, and I am very glad to have been associated in supporting one for whom we have such a high regard in public work, and such private affection.

Mr. BRACKEN: It is due to the Committee that the point raised by the right hon. Member for Edgbaston (Mr. Chamberlain) should have a satisfactory answer. The President of the Board of Trade has given us a long and detailed speech about points which have no relation whatever to the discussion that has taken place. The right hon. Gentleman talked about perorations. His speech has been one long peroration and has not dealt with one of the practical points raised. It really is disgraceful that the Committee should be treated in this way. I know that right hon. and hon. Gentlemen opposite are very anxious to burke discussion on this issue. The Chancellor's Budget is absolutely hollow and rotten. It has not provided for an enormous amount of money which really will have to be raised—[Interruption.]
We must ask the President of the Board of Trade, or whosoever speaks for the Government to reply to this point—

The FINANCIAL SECRETARY to the TREASURY (Mr. Pethick-Lawrence): rose in his place, and claimed to move, "That the Question be now put," but The CHAIRMAN withheld his assent, and declined then to put that Question.

Mr. BRACKEN: I notice that the Financial Secretary is attempting to bring the discussion to a close. I congratulate the hon. Gentleman. It is worthy of a Government which is attempting to burke discussion of the most important point raised during the Debate.

The CHAIRMAN: I think that the Committee is ready to come to a decision.

Several hon. Members rose—

Mr. PETHICK-LAWRENCE rose in his place, and claimed to move, "That the Question be now put."

Question, "That the Question be now put," put, and agreed to.

Question,
That it is expedient to amend the law relating to the National Debt, Customs and Inland Revenue (including Excise) and to make further provision in connection with finance,
put accordingly and agreed to.

Resolution to be reported upon Monday next; Committee to sit again To-morrow.

Orders of the Day — CHANNEL ISLANDS (REPRE-SENTATION) MEASURE, 1931.

Lord HUGH CECIL: I beg to move,
That, in accordance with the Church of England Assembly (Powers) Act, 1919, this House do direct that the Channel Islands (Representation) Measure, 1931, be presented to His Majesty for Royal Assent.
11.0 p.m.
I do not think it will be necessary to detain the House long in the consideration of this Resolution and the next Resolution which is on the Paper in my name, and, with the indulgence of the House, I wish to treat both together. The purpose of these Resolutions is to bring the Channel Islands within reach of the organisation of the Church Assembly and
the Enabling Act, by which legislation on Church matters is greatly facilitated. The first Resolution relates to giving representation to the Channel Islands in the Church Assembly. That is quite a simple matter and relates only to the lay house because the clerical house is a part of the Convocation controlled by the rules of Convocation, and the Bishop of Winchester, as Bishop of the Diocese, is already a member of the Church Assembly. It relates, therefore, as I say, only to the laity, and the method adopted has been agreed upon, both by the authorities and persons interested in the Islands, and also by the Assembly here.
The other Resolution is more difficult. It deals with the application of Church legislation to the Islands. As the House will understand, the legislation has to be adapted to suit the condition in the Islands. Therefore, it cannot be simply applied, at any rate in some cases. Accordingly, it is necessary to have some power of modifying to suit the particular circumstances. In order to do that, you have to face the difficulty that the legislative authority for the Channel Islands is to some extent a matter of controversy. The States claim to have full autonomy, and on the other hand the Home Office, on behalf of the Crown, or on behalf of the Duchy of Normandy, which, I suppose, is the original title, claim also autonomy. Of course, it was not at all the desire of the Church to intervene in a controversy of that kind, which is a matter of centuries old. Therefore the matter was the subject of a good deal of negotiation, and in the end a settlement was arrived at by the Bishop of Winchester, who is in the fortunate position of being trusted both by the Crown and by the Islands, to make schemes and to adopt measures suitable for the Islands. When they are consented to in the Islands and by the Home Office and the Church Assembly, they will be applied. It is very simple, and both the authorities in the Islands and the Home Office and the Church Assembly have all agreed to this matter, and I hope the House will consent to pass the Resolutions.

Miss PICTON-TURBERVILL: I beg to second the Motion.

Mr. MANDER: It is always a matter of regret that these Measures from the Church Assembly are brought forward
at this late hour, and I think there is a general wish among certain Members in all three parties in the House that when a matter of really substantial importance does come along, an approach shall be made to the Prime Minister to ask whether it is not possible, at any rate as an experiment, that such a Measure should be taken at the hour of 7.30. But I quite agree that the Measures now before us are not very controversial. At the same time, there are one or two questions that I should like to ask, and perhaps, as one who comes of Guernsey descent, I might be allowed to take a little interest in these islands.
I have always felt that it was a matter of great regret, when these Measures have come before the House, that they did not apply to the Channel Islands, and therefore I am delighted to find these Measures brought forward to-night to give the Channel Islands the same benefits which other parts of the country in the United Kingdom are now getting. One has to be very careful in dealing with the Channel Islands, because their system of government is of great antiquity. They are not, and never have been, so far as I know, under the control and subject to the management of the Parliament of this country. They have their own institutions, of which they are very proud, and they do not desire to give up any rights that they may possess. I should like, therefore, to ask whether the decisions that have been come to, both in the Church Assembly and in the Legislative Chambers of the Islands of Jersey and Guernsey, were unanimous or not, whether there is a strong minority in any of those Assemblies.
I should like to know also what is meant by Clause 5 of the Channel Islands (Church Legislation) Measure, where it says:
Nothing in this Measure shall affect any procedure for applying Measures to the Islands, or either of them, other than the procedure hereby authorised.
To what does that refer? And in paragraph (b) it says:
The direct application to the Islands, or either of them, of Measures or part of Measures dealing exclusively with the formularies of the Church of England or the spiritual interests or privileges of those members.
Why has that omission been made? What are the reasons behind it? There is another point. I think I am right in assuming that the definition given of who is a member of the Church is exactly the same as has been applied throughout the length and breadth of this country. I want an assurance on that point, and if the Noble Lord can answer the points that I have mentioned, I for one shall be satisfied and only too delighted to think that the Channel Islands will have the benefit of Measures passed through the Church Assembly.

Lord H. CECIL: I can quite easily answer the questions that are put. Of course, as my hon. Friend says, the Channel Islands are, in respect of their Government, a most interesting place. They are part of the original Duchy of Normandy, and they say that they conquered England and not England them, and therefore they are not in any sense subject to the Parliamentary institutions of England. About that there is a great deal of controversy, and the purpose of Clause 5 is to keep clear of that controversy, and to leave the Islands exactly as they stand. Therefore we say:
Nothing in this Measure shall affect any procedure for applying measures to the Islands other than the procedure hereby authorised.
We do not come to any decision as to whether there are other ways of providing them, but we provide an uncontroversial way which we hope will always be used. The second Clause excludes the reception of formularies, because they have always been excluded. They have always had Acts of Uniformity, and there has never been any controversy about it. So we leave them out. The purpose of the Clause is to avoid controversy and to leave it precisely as it stands, without affecting it one way or the other. There were most elaborate negotiations in framing the Measure, first with the States, then with the Dean of Guernsey and Jersey, and then with the Home Office, and in the end this settlement was arrived at. So far as I know, it was unanimous; I have never heard of any opposition. Complete unanimity would be too much to hope for in any Measure, but substantial agreement was come to, and there was no opposition so far as I have heard.

Question put, and agreed to.

Resolved,
That, in accordance with the Church of England Assembly (Powers) Act, 1919, this House do direct that the Channel Islands (Representation) Measure, 1931, be presented to His Majesty for Royal Assent.

Orders of the Day — CHANNEL ISLANDS (CHURCH LEGISLATION) MEASURE, 1931.

Motion made, and Question proposed,
That, in accordance with the Church of England Assembly (Powers) Act, 1919, this House do direct that the Channel Islands (Church Legislation) Measure, 1931, be presented to His Majesty for Royal Assent."—[Lord H. Cecil.]

Mr. EDE: Can the Noble Lord explain the position that will arise if the States of the Islands or the Island concerned does not entirely agree to the Measure that is submitted to them? Unfortunately the report of the Ecclesiastical Committee does not tell us much, because it merely repeats the words of paragraph 3 of the Schedule of the Measure. Apparently a Measure is submitted to the States of the Islands or the Island concerned, and they express their views, but there is no provision made that those views shall be effective. All that happens after that, apparently, is that the Bishop of the Church Assembly consider these views. If they like to come to a decision contrary to the views expressed by the State, apparently they are entitled to do so, and the views expressed by the States then have no effect.

Lord H. CECIL: The matter would be lef to the Bishop, but there is no doubt that the Bishop would not press for a Measure which the Islands did not want, because the whole purpose of this Measure is to extend legislation which the Islands desire to have extended. It is not desired to force on them legislation which they do not want.

Question put, and agreed to.

Resolved,
That, in accordance with the Church of England Assembly (Powers) Act, 1919, this House do direct that the Channel Islands (Church Legislation) Measure, 1931, be presented to His Majesty for Royal Assent.

Orders of the Day — Ecclesiastical Commissioners (Pro-vision for Unbeneficed Clergy) Measure, 1928, (Amendment)Measure, 1931.

Mr. MIDDLETON: I beg to move,
That, in accordance with the Church of England Assembly (Powers) Act, 1919, this House do direct that the Ecclesiastical Commissioners (Provision for Unbeneficed Clergy) Measure, 1928 (Amendment) Measure, 1931, be presented to His Majesty for Royal Assent.
The effect of the Measure which I submit to the House is to make a small addition to the Measure that was passed by the House in 1928 dealing with the provision for unbeneficed clergy. The House will see by the report of the Ecclesiastical Committee that it refers to a Measure which authorises the Ecclesiastical Commissioners to make grants out of their common fund for certain un-beneficed clerks in Holy Orders. The object of the present Measure is to extend this power of grant to a class which is now excluded, that is, the class of whole time chaplains in certain institutions. I think I can help the House to realise the full effect of the change by quoting the Clause of the 1928 Act as it would read if the Measure proposed to-night is accepted. Section 1 of that Measure now reads:
The purposes to which the revenue of the Common Fund of the Ecclesiastical Commissioners may be applied shall include the making of further provision in accordance with any scheme or regulations from time to time made by the said Commissioners for any Clerk in Holy Orders who is unbeneficed, has attained the prescribed age, holds a curacy or performs ecclesiastical duty as assistant to the incumbent of a benefice.
That is where the addition that we propose comes in:
Or is employed as whole-time chaplain of any such religious establishment or institution as may be prescribed.
It then goes on to say that it applies in the parts of the Province of Canterbury and the Province of York other than the Channel Islands and the Isle of Man. It is a very small thing which the House is asked to pass. It is a necessary additional provision to the Measure which is now in force, and I would commend to the House the last sentence of the report of the Ecclesiastical Committee, which goes rather further than some reports which are submitted with Measures:
The constitutional rights of His Majesty's subjects are not affected and the Ecclesiastical Committee are of opinion that it is expedient that the Measure should proceed.

Major Sir JOHN BIRCHALL: I beg to second the Motion.

Mr. KELLY: I notice that the Isle of Man is excluded from this Measure. May I ask why?

Mr. MIDDLETON: It is under a different administration.

Lord H. CECIL: We do not meddle with the Isle of Man.

Mr. KELLY: But you did in a recent Bill.

Lord H. CECIL: It is always a special circumstance if it deals with the Isle of
Man. Normally it is left to manage its own affairs.

Question put, and agreed to.

Resolved,
That, in accordance with the Church of England Assembly (Powers) Act, 1919, this House do direct that the Ecclesiastical Commissioners (Provision for Unbeneficed Clergy) Measure, 1928 (Amendment) Measure, 1931, be presented to His Majesty for Royal Assent.

The remaining Orders were read, and postponed.

Orders of the Day — ADJOURNMENT.

Resolved, "That this House do now adjourn."—[Mr. T. Kennedy.]

Adjourned accordingly at Nineteen Minutes after Eleven o'Clock.